As filed with the Securities and Exchange Commission on June 26, 2000
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
Registration Statement Under the Securities Act of 1933
HUDSON RIVER BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 6036 14-1803212
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(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
CARL A. FLORIO
One Hudson City Centre Hudson River Bancorp, Inc.
Hudson, New York 12534 One Hudson City Centre
(518) 828-4600 Hudson, New York 12534
(518) 828-4600
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(Address, including ZIP code, and (Name, address, including ZIP code,
telephone number,including area code, and telephone number, including area
of registrant's principal executive code, of agent for service)
offices)
COPIES TO:
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<S> <C> <C>
BETH A. FREEDMAN, ESQ. RAYMOND A. TIERNAN, ESQ.
MARTIN L. MEYROWITZ, P.C. HARRY L. ROBINSON GERALD F. HEUPEL, JR., ESQ.
Silver, Freedman & Taff, L.L.P. Cohoes Bancorp, Inc. Elias, Matz, Tiernan & Herrick, L.L.P.
1100 New York Avenue, N.W. 75 Remsen Street 734 15th Street, N.W., 12th Floor
Washington, D.C. 20005 Cohoes, NY 12047 Washington, D.C. 20005
</TABLE>
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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Calculation of Registration Fee
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<S> <C> <C> <C> <C>
Proposed maximum Proposed maximum
Title of each class of Amount to offering price aggregate offering Amount of
securities to be registered be registered(1) per share(2) price(2) registration fee
Common Stock, $.01 par value 10,395,744 shares $10.97 $114,046,140 $30,108
<FN>
(1) Based upon the estimated maximum number of shares that may be issued upon
consummation of the merger ("Merger") with Cohoes Bancorp, Inc.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(f)(1) and 457(c), and solely for purposes of
calculating the registration fee, the proposed maximum aggregate offering
price is $114,046,140, which equals (x) the average of the high and low
sale prices of the common stock, of Cohoes Bancorp, Inc., of $13.00 as
reported on the Nasdaq National Market on June 20, 2000, multiplied by (y)
8,772,780, the total number of shares of Cohoes Bancorp, Inc. common stock
(including shares issuable pursuant to the exercise of outstanding options
to be canceled in the Merger. The proposed maximum offering price per share
is equal to the proposed maximum aggregate offering price determined in the
manner described in the preceding sentence divided by the maximum number of
shares of Hudson River common stock that could be issued in the Merger.
</FN>
</TABLE>
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<PAGE>
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<S> <C>
[HUDSON RIVER BANCORP, INC. LOGO] [COHOES BANCORP, INC. LOGO]
</TABLE>
Merger Proposed -- Your Vote Is Very Important
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<S> <C>
The Boards of Directors of Hudson River Bancorp, Inc. and Upon completion of the merger, Cohoes' shareholders will
Cohoes Bancorp, Inc. have agreed to merge and are seeking receive 1.185 shares of Hudson River common stock in
your approval of this important transaction. The merger is exchange for each share of Cohoes common stock they own.
governed by the Agreement and Plan of Merger dated April Hudson River shareholders will continue to own their existing
25, 2000 between Hudson River Bancorp, Inc. and Cohoes shares.
Bancorp, Inc. We commonly refer to it in this document as the
"merger agreement." On July ___, 2000, the closing price of Hudson River common
stock was $______, making 1.185 shares worth $______. The
Hudson River believes that the merger will, among other closing price of Cohoes common stock on that date was
things, create a dominant franchise with assets of $______. These prices will fluctuate between now and the
approximately $1.8 billion and a market capitalization of completion of the merger. Hudson River common stock is
approximately $275 million, create opportunities for listed on the Nasdaq National Market under the symbol
significant cost savings and revenue enhancement, and "HRBT." Cohoes common stock is listed on the Nasdaq
strengthen the combined businesses' competitive position in National Market under the symbol "COHB."
the rapidly changing financial services industry. Cohoes is
recommending the merger because, among other things, it The merger cannot be completed unless the shareholders of
enables Cohoes' shareholders to participate in the future each company adopt the merger agreement by the affirmative
growth of the combined businesses, which are expected to vote of a majority of the total outstanding shares. Hudson
benefit from opportunities for significant cost savings, strong River has scheduled its annual meeting and Cohoes has
capital position and revenue enhancements. scheduled a special meeting to vote on the matters necessary to
complete the merger.
-------------------------------------------------------------- -------------------------------------------------------------
We are asking Hudson River shareholders to: We are asking Cohoes shareholders to adopt the merger
agreement.
o adopt the merger agreement and approve the issuance
of Hudson River common stock;
o approve an amendment to the Hudson River 1998
Stock Option and Incentive Plan and an amendment
to the Hudson River 1998 Recognition and Retention
Plan;
o elect three directors of Hudson River; and
o ratify the appointment of auditors.
The annual meeting of Hudson River shareholders will be The special meeting of Cohoes shareholders will be held:
held:
_________________, August __, 2000 _________________, August __, 2000
3:00 p.m., local time ___:___ __.m., local time
The St. Charles Hotel and Restaurant Century House
16 Park Place, Hudson, New York 997 New Loudon Road, Latham, New York
-------------------------------------------------------------- -------------------------------------------------------------
Whether or not you plan to attend your shareholder meeting, Both Boards of Directors have unanimously approved the
please take the time to vote by signing, dating and mailing merger and recommend you vote "FOR" approval of the
your enclosed proxy card. Regardless of the number of merger.
shares you own, your vote is very important. Please act
today. We encourage you to read this document carefully.
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Thank you for your continued interest and support.
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-------------------------------------------------------------- -------------------------------------------------------------
Carl A. Florio Harry L. Robinson
President and Chief Executive Officer President and Chief Executive Officer
Hudson River Bancorp, Inc. Cohoes Bancorp, Inc.
-------------------------------------------------------------- -------------------------------------------------------------
</TABLE>
Neither the SEC nor any state securities regulator has approved the Hudson River
common shares to be issued under this document or determined if this document is
accurate or adequate. Any representation to the contrary is a criminal offense.
These securities are not savings or deposit accounts or other obligations of any
bank or nonbank subsidiary of any of the parties, and they are not insured by
the Federal Deposit Insurance Corporation, the Bank Insurance Fund or any other
governmental agency.
This document is dated as of July ____, 2000 and is first being mailed to
shareholders on or about July ___, 2000.
<PAGE>
HUDSON RIVER BANCORP, INC.
One Hudson City Centre
Hudson, New York, 12534
(518) 828-4600
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on August ___, 2000
Notice is hereby given that the annual meeting of shareholders of
Hudson River Bancorp, Inc. will be held at the St. Charles Hotel and Restaurant
located at 16 Park Place, Hudson, New York on August __, 2000 at 3:00 p.m.,
local time.
A proxy card and proxy statement for the meeting are enclosed.
The meeting is for the purpose of considering and acting upon:
1. The adoption of an Agreement and Plan of Merger between
Cohoes Bancorp, Inc. and Hudson River Bancorp, Inc., dated
April 25, 2000 and the approval of the issuance of shares
of Hudson River common stock in the merger; and
2. The approval of amendments to the Hudson River 1998 Stock
Option and Incentive Plan and the Hudson River 1998
Recognition and Retention Plan, respectively, to increase
the number of shares of Hudson River common stock reserved
for issuance thereunder from 1,785,375 to 1,930,241 in the
case of the Hudson River 1998 Stock Option and Incentive
Plan and from 714,150 to 918,324 in the case of the Hudson
River 1998 Recognition and Retention Plan;
3. The election of three directors of Hudson River;
4. The ratification of the appointment of KPMG LLP as auditors
of Hudson River for the fiscal year ending March 31, 2001;
and such other business as may properly come before the meeting or any
adjournment thereof. The Board of Directors is not aware of any such other
business.
Any action may be taken on the foregoing proposals at the meeting on
the date specified above, or on any date or dates to which the meeting may be
adjourned. Only shareholders of record at the close of business on June 20, 2000
are entitled to vote at the meeting or any adjournments or postponements.
You are requested to complete and sign the enclosed proxy card which
is solicited on behalf of the board of directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend the meeting and vote
in person.
Remember, if your shares are held in the name of a broker, only your
broker can vote your shares on the merger agreement and only after receiving
your instructions. Please contact the person responsible for your account and
instruct him/her to execute a proxy card on your behalf. You should also sign,
date and mail your proxy at your earliest convenience.
Please review the document accompanying this notice for more complete
information regarding the matters proposed for your consideration at the annual
meeting. Should you have any questions or require assistance, please call Regan
& Associates, who is assisting us, at (___) ___-____.
BY ORDER OF THE BOARD OF DIRECTORS
Earl Schram, Jr.
Chairman of the Board
Hudson, New York
July ____, 2000
The Board of Directors of Hudson River unanimously recommends that you vote
"FOR" each of the proposals. Your support is appreciated.
<PAGE>
Cohoes Bancorp, Inc.
75 Remsen Street
Cohoes, New York 12047
(518) 233-6500
Notice of Special Meeting of Shareholders
to be held on August _____, 2000
Notice is hereby given that a special meeting of shareholders of
Cohoes Bancorp, Inc. will be held at the Century House, 997 New Loudon Road,
Latham, New York on August ___, 2000 at __:___ __.m., local time.
A proxy card and proxy statement for the meeting are enclosed.
The meeting is for the purpose of considering and acting upon the
adoption of an Agreement and Plan of Merger between Cohoes Bancorp, Inc. and
Hudson River Bancorp, Inc., dated April 25, 2000, and such other business as may
properly come before the meeting or any adjournment or postponement thereof. The
Board of Directors is not aware of any such other business.
Any action may be taken on the foregoing proposal at the meeting on
the date specified above, or on any date or dates to which the meeting may be
adjourned. Only shareholders of record at the close of business on June 22, 2000
are entitled to vote at the meeting or any adjournments or postponements.
YOUR VOTE IS VERY IMPORTANT
To ensure that your shares are voted at the special meeting, please
sign, date and promptly mail the accompanying proxy card in the enclosed
envelope. Any shareholder of record present at this meeting or at any
adjournments or postponements of the meeting may revoke his or her proxy and
vote personally on each matter brought before the meeting.
You may revoke your proxy at any time before it is voted.
Remember, if your shares are held in the name of a broker, only your
broker can vote your shares and only after receiving your instructions. Please
contact the person responsible for your account and instruct him/her to execute
a proxy card on your behalf. You should also sign, date and mail your proxy at
your earliest convenience.
Please review the document accompanying this notice for more complete
information regarding the matter proposed for your consideration at the special
meeting. Should you have any questions or require assistance, please call Regan
& Associates, who is assisting us, at (___) ___-____.
BY ORDER OF THE BOARD OF DIRECTORS
Harry L. Robinson
President and Chief Executive Officer
Cohoes, New York
July ___, 2000
The Board of Directors of Cohoes unanimously recommends that you vote "FOR" the
adoption of the merger agreement. Your support is appreciated.
<PAGE>
TABLE OF CONTENTS
Page
TABLE OF CONTENTS.............................................................i
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE MEETINGS.......................1
SUMMARY ...................................................................2
THE COMPANIES......................................................2
The Merger and the Merger Agreement................................2
The Stock Option Agreements........................................4
The Shareholder Meetings...........................................4
Share Ownership of Management and Directors........................5
Comparative Market Value Information...............................6
DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION..............................7
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA..............................8
Selected Historical Financial Data of Hudson River.................8
Selected Historical Financial Data of Cohoes.......................9
Unaudited Historical and Pro Forma Per Share Data.................10
THE MERGER ..................................................................11
Overview of the Merger............................................11
Merger Consideration..............................................11
Background of the Merger..........................................11
Hudson River's Reasons for the Merger.............................12
Cohoes' Reasons for the Merger....................................13
Opinion of Hudson River's Financial Advisor.......................15
Opinion of Cohoes' Financial Advisor..............................20
Accounting and Tax Treatment......................................22
Corporate Structure after the Merger..............................23
Regulatory Matters................................................23
Obligations of the Post-Merger Corporation........................24
What We Must Do to Complete the Merger............................24
Amendments to Hudson River's Certificate of Incorporation.........24
Interests of Directors and Officers in the Merger
that are Different from Your Interests........................25
Other Provisions of the Merger Agreement..........................29
The Stock Option Agreements.......................................29
Exchange of Certificates..........................................30
Resales of Hudson River Common Stock by Affiliates of Cohoes......30
Dissenters' Rights................................................30
COMPARATIVE STOCK PRICES AND DIVIDEND INFORMATION............................31
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION...........................31
Unaudited Pro Forma Condensed Combined Balance
Sheet as of March 31, 2000....................................33
Unaudited Pro Forma Condensed Combined Income Statement for the
Twelve Months Ended March 31, 2000............................34
COMPARISON OF SHAREHOLDER RIGHTS.............................................36
AMENDMENTS TO THE HUDSON RIVER 1998 STOCK OPTION AND INCENTIVE PLAN AND
THE HUDSON RIVER 1998 RECOGNITION AND RETENTION PLAN..............37
Description of the 1998 Stock Option and Incentive Plan...........38
Description of the 1998 Recognition and Retention Plan............40
i
<PAGE>
THE SHAREHOLDER MEETINGS.....................................................42
Times and Places of the Shareholder Meetings; Matters
to be Considered at the Shareholder Meetings..................42
Voting Rights of Shareholders; Votes Required for Approval........42
Voting of Proxies; Revocability of Proxies;
Proxy Solicitation Costs......................................44
ADDITIONAL INFORMATION REGARDING THE HUDSON RIVER ANNUAL MEETING.............44
Election of Directors.............................................45
Executive Compensation............................................49
Ratification of the Appointment of Auditors.......................56
LEGAL MATTERS................................................................56
EXPERTS ..................................................................56
INDEPENDENT PUBLIC ACCOUNTANTS...............................................56
FUTURE SHAREHOLDER PROPOSALS.................................................56
WHERE YOU CAN FIND MORE INFORMATION..........................................57
APPENDICES
A Agreement and Plan of Merger between Hudson River and Cohoes
B Opinion of Sandler O'Neill & Partners, L.P.
C Opinion of Keefe Bruyette & Woods, Inc.
D Amendments to Hudson River Certificate of Incorporation
E Stock option grant of Hudson River to Cohoes
F Stock option grant of Cohoes to Hudson River
G Hudson River Amended 1998 Stock Option and Incentive Plan
H Hudson River Amended 1998 Recognition and Retention Plan
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE MEETINGS
Q: What will happen to outstanding Q: Should I send in my stock
shares of Cohoes and Hudson River certificates now?
common stock?
A: No. After we complete the merger,
A: Upon completion of the merger, each Hudson River will send instructions
outstanding share of Cohoes common to Cohoes shareholders whose shares
stock will be converted into 1.185 are converted in the merger. These
shares of Hudson River common instructions will explain how to
stock, with fractional shares paid exchange your Cohoes stock
in cash. Outstanding shares of certificates for Hudson River stock
Hudson River common stock will certificates. Hudson River
remain outstanding with no change. shareholders will keep their
After the merger, shares of Hudson current stock certificates.
River common stock will represent
the combined assets and business of Q: How do I vote?
Hudson River and Cohoes.
A: Just mail your signed proxy card in
Q: Is the merger taxable? the enclosed return envelope as
soon as possible so that your
A: Hudson River and Cohoes each expect shares may be represented at your
the merger to be tax-free. Our shareholders' meeting. In order to
legal counsel have delivered assure that your vote is counted,
opinions that neither Hudson River, please give your proxy as
Cohoes nor the Cohoes shareholders instructed on your proxy card even
should recognize any gain or loss if you currently plan to attend the
for U.S. federal income tax meeting in person. If you sign and
purposes in the merger, except with send in your proxy card and do not
respect to any cash that Cohoes indicate how you want to vote, we
shareholders will receive instead will count your proxy card as a
of fractional shares. In addition, vote in favor of each proposal
no gain or loss should be submitted at your shareholders'
recognized by Hudson River meeting.
shareholders with respect to their
Hudson River common stock as a Q: Can I change my vote?
result of the merger.
A: Yes. You can change your vote at
We describe the material federal any time prior to the shareholders'
income tax consequences of the meeting by submitting a later-
transaction in more detail on page dated signed proxy card or by
__. The tax consequences to you attending the meeting and voting in
will depend on the facts of your person.
own situation. Please consult your
tax advisor for a full Q: If my shares are held in "street
understanding of the tax name" by a broker, will the broker
consequences that the merger will vote the shares for me on the
have on you. merger?
Q: Am I entitled to appraisal rights? A: No. You must instruct your broker
to vote your shares on the merger,
A: No. Hudson River and Cohoes following the directions provided
shareholders are not entitled to to you by your broker. Your failure
appraisal rights in connection with to instruct your broker to vote on
the merger. the merger will be the equivalent
of voting against the merger.
Q: When do you expect the merger to be
completed? Q: Who do I call if I have questions
about the meetings or the merger?
A: We expect to complete the merger in
the fourth quarter of 2000. A: Hudson River shareholders may call
However, because the merger is (___) ___- _____.
subject to governmental approvals,
we cannot predict the exact timing. Cohoes shareholders may call (___)
___-____.
1
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SUMMARY
This section highlights selected information in this document and may not
contain all of the information important to you. To understand the merger more
fully and for a more complete description of the legal terms of the merger, you
should read this entire document carefully, including Appendices, and the
documents to which we refer to in this document. A list of the documents that we
incorporate by reference appears on page ___ under the heading "Where You Can
Find More Information."
THE COMPANIES shareholders will receive a check for
any fractional share in an amount
Hudson River Bancorp, Inc. equal to the share fraction multiplied
One Hudson City Centre by the closing price of Hudson River
Hudson, New York 12534 common stock on the last trading day
Telephone: (518) 828-4600 before we complete the merger.
Headquartered in Hudson, New York, For example, if you currently own 100
Hudson River Bancorp, Inc. is the shares of Cohoes common stock, after
publicly traded parent company of the merger you will receive 118 shares
Hudson River Bank & Trust Company. of Hudson River common stock and a
With over $1.1 billion in total check for an amount equal to .5
assets, Hudson River Bank & Trust multiplied by the closing price of one
Company is one of the largest locally share of Hudson River common stock on
based savings banks in the the last trading day before we
Albany/Capital District Region. Hudson complete the merger. The value of the
River Bank & Trust Company currently stock that you will receive will
operates through its main office and fluctuate as the price of Hudson River
17 branch offices located throughout common stock changes.
the greater Albany region. As of March
31, 2000, Hudson River Bancorp, Inc. On July ___, 2000, the latest
had total consolidated assets of $1.1 available date prior to the mailing of
billion, deposits of $748.6 million this document, the closing share price
and shareholders' equity of $200.7 of Hudson River common stock as
million. reported on the Nasdaq National Market
was $____. Applying the 1.185 exchange
Cohoes Bancorp, Inc. ratio to the Hudson River closing
75 Remsen Street price on that date, each holder of
Cohoes, New York 12047 Cohoes common stock would be entitled
Telephone: (518) 233-6556 to receive Hudson River common stock
with a market value of approximately
Cohoes Bancorp, Inc. is the holding $____ for each share of Cohoes common
company for Cohoes Savings Bank stock. The value of Hudson River and
located in Cohoes, New York. At March Cohoes common stock, however, is
31, 2000, Cohoes' branch network likely to change between now and
consisted of 21 locations throughout completion of the merger. You should
the counties of Albany, Greene, obtain current price quotes for Hudson
Rensselaer, Saratoga, Schenectady and River and Cohoes common stock. See
Warren in New York. As of March 31, "Selected Historical and Pro Forma
2000, Cohoes Bancorp, Inc. had total Financial Data" on page __.
consolidated assets of $704.4 million,
deposits of $491.5 million and Ownership of Hudson River After the
shareholders' equity of $121.1 Merger
million.
Hudson River will issue approximately
THE MERGER AND THE MERGER AGREEMENT 9.4 million shares of Hudson River
(page __) common stock to Cohoes shareholders in
the merger. The shares of Hudson River
We have attached the Agreement and common stock to be issued to Cohoes
Plan of Merger to this document as shareholders in the merger will
Appendix A. Please read the merger represent approximately 38% of the
agreement carefully. It is the legal outstanding Hudson River common stock
document that governs the merger. after the merger. This information
does not take into account outstanding
What Cohoes Shareholders Will Receive Cohoes or Hudson River stock options.
(page __)
As a result of the merger, Cohoes
shareholders will receive, for each
share of Cohoes common stock, 1.185
shares of Hudson River common stock.
Hudson River will not issue any
fractional shares. Cohoes
2
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Board of Directors of Hudson River o widen the combined company's
After the Merger product range through a broadened
customer base with similar
Following the merger, Hudson River's demographics;
board of directors will have 12
members, of which six members will be o enable shareholders of both
selected by the pre-merger board of companies to participate in the
Hudson River and six members will be future growth of the combined
selected by the pre-merger board of businesses of Hudson River and
Cohoes. The merger agreement includes Cohoes;
amendments to Hudson River's
certificate of incorporation intended o enable shareholders of both
to maintain this balance for six years companies to benefit from
after the merger. opportunities for significant cost
savings and revenue enhancements;
Interests of Hudson River's and and
Cohoes' Officers and Directors in the
Merger (page __) o provide customers of both companies
with a broader range of products
You should be aware that a number of and services.
Hudson River and Cohoes directors and
executive officers may have interests Hudson River's board of directors
in the merger that are different from, believes the merger is in its
or in addition to, their interests as shareholders' best interests and
shareholders. These interests exist unanimously recommends that Hudson
because of the rights that these River's shareholders vote "FOR" the
directors and executive officers have proposal to adopt the merger agreement
under the terms of their benefit and and approve the issuance of shares of
compensation plans and also, in the Hudson River common stock in the
case of the executive officers, under merger.
the terms of various agreements. These
agreements provide some executive Cohoes' board of directors believes
officers with severance benefits if the merger is in its shareholders'
Hudson River terminates their best interests and unanimously
employment under specified recommends that Cohoes' shareholders
circumstances following the merger. vote "FOR" the proposal to adopt the
These interests also arise from merger agreement.
provisions of the merger agreement
relating to appointments to the Hudson You should note, however, that
River board, employment arrangements achieving these objectives is subject
and employee benefits after the to particular risks and uncertainties,
merger, the granting of additional including possible difficulties in
stock options and restricted stock combining the operations of the two
awards, and indemnification and companies, in achieving anticipated
insurance after the merger. cost savings and other financial and
operating benefits from the merger and
The members of Hudson River's and in the introduction and acceptance of
Cohoes' boards of directors knew about new products and services into Cohoes'
and considered these additional market place. See "Disclosure
interests when they approved the Regarding Forward-Looking
merger agreement. Information." To review our reasons
for the merger in greater detail, as
Our Reasons and Recommendations for well as how we came to agree on the
the Merger (page ____) merger, please see pages [___] through
[____].
Hudson River and Cohoes believe that
the merger will: Opinions of Financial Advisors (pages
__ through ___)
o create a dominant Capital District
Region franchise with an expanded Hudson River. Among other factors
core market area; considered in deciding to approve the
merger, the Hudson River board of
o create opportunities for directors received the opinion of its
significant operational benefits financial advisor, Sandler O'Neill &
and financial cost savings and Partners, L.P., to the effect that, as
revenue enhancements through the of the date of the opinion, the
integration of Hudson River's and exchange ratio was fair to the holders
Cohoes' operations; of Hudson River common stock from a
financial point of view. We have
o strengthen the combined company's attached a copy of the opinion to this
competitive and capital position in document as Appendix B. You should
the financial services industry, read this opinion completely to
which is rapidly changing and understand the assumptions made,
growing more competitive; matters considered and
3
<PAGE>
limitations of the review undertaken o receipt of opinions regarding the
by Sandler O'Neill & Partners, L.P. in federal income tax consequences and
providing its opinion. accounting treatment of the merger;
and
Cohoes. Among other factors considered
in deciding to approve the merger, the o the absence of any injunction or
Cohoes board of directors received the legal restraint blocking the merger
opinion of its financial advisor, or government proceeding preventing
Keefe Bruyette & Woods, Inc. that, as the completion of the merger.
of the date of the opinion, the
exchange ratio was fair to the holders Hudson River or Cohoes could decide to
of Cohoes common stock from a complete the merger even though one or
financial point of view. We have more of the conditions in the merger
attached a copy of the opinion to this agreement has not been met. We cannot
document as Appendix C. You should be certain when (or if) the conditions
read this opinion completely to to the merger will be satisfied or
understand the assumptions made, waived, or that the merger will be
matters considered and limitations of completed.
the review undertaken by Keefe
Bruyette & Woods, Inc. in providing Termination of the Merger Agreement
its opinion. (page __)
Material Federal Income Tax We can mutually agree at any time to
Consequences of the Merger (page __) terminate the merger agreement prior
to completing the merger. In addition,
We have structured the merger so that either of us may terminate the merger
Hudson River, Cohoes and the holders agreement if:
of Cohoes common stock will not
recognize any income, gain or loss for o the other party violates a material
federal income tax purposes as a provision of the merger agreement
result of the merger, except for gain and does not cure the violation
on cash received by Cohoes within 30 days;
shareholders for fractional shares.
o any required approval of
It is a condition to closing the shareholders or regulatory
merger that each company receive an authorities is not received; or
updated opinion of counsel that the
merger will be a tax-free o the merger has not been completed
reorganization for federal income tax by February 28, 2001.
purposes.
THE STOCK OPTION AGREEMENTS
Tax matters are very complicated and (page _____)
the tax consequences that the merger
will have on you will depend on the To increase the likelihood that the
facts of your own situation. You merger will be completed, and to
should consult your tax advisors for a discourage other persons who may be
complete description of the tax interested in acquiring Cohoes or
consequences of the merger to you. Hudson River, each party to the
agreement required the other party to
Shareholders Do Not Have Appraisal grant it a stock option. The option
Rights allows either party to purchase up to
19.9% of the outstanding shares of the
Under Delaware law, neither company's other party's common stock after
shareholders have a right to an giving effect to the exercise of the
appraisal of the value of their shares entire option. Under the Hudson River
in connection with the merger. option, Cohoes may acquire up to
3,093,765 shares at a price of $9.3125
What We Must Do to Complete the Merger per share and under the Cohoes option,
(page ____) Hudson River may acquire up to
1,574,538 shares at a price of $9.8125
The completion of the merger depends per share.
on a number of conditions being met.
In addition to compliance with the THE SHAREHOLDER MEETINGS
merger agreement, these conditions
include: Hudson River Shareholders (page __ )
o adoption of the merger agreement by The Hudson River annual meeting has
Hudson River and Cohoes been called for August __, 2000, at
shareholders; 3:00 p.m. local time, at the St.
Charles Hotel and Restaurant located
o approval of the merger by federal at 16 Park Place,
and state regulatory authorities;
4
<PAGE>
Hudson, New York. At this meeting, this special meeting, Cohoes
Hudson River shareholders will be shareholders will be asked to adopt
asked to: the merger agreement.
1. Adopt the merger agreement and Record Date. You can vote at the
approve the issuance of shares of Cohoes special meeting if you owned
Hudson River common stock in the Cohoes common stock at the close of
merger. business on June 22, 2000. You can
cast one vote for each share of Cohoes
2. Amend the Hudson River 1998 Stock common stock you owned at that time.
Option and Incentive Plan and the
Hudson River 1998 Recognition and Vote Required. Adoption of the merger
Retention Plan to increase the agreement will require the affirmative
number of shares of Hudson River vote of a majority of the outstanding
common stock reserved for issuance Cohoes common stock.
thereunder from 1,785,375 to
1,930,241 in the case of the Hudson Proxies. You can vote your shares at
River 1998 Stock Option and the Cohoes special meeting by marking
Incentive Plan and from 714,150 to the enclosed proxy card with your
918,324 in the case of the Hudson vote, signing it and mailing it in the
River 1998 Recognition and enclosed return envelope. You can
Retention Plan. revoke your proxy at any time before
it is voted either by sending to
3. Elect three directors. Cohoes a revocation notice or a new
proxy or by attending the Cohoes
4. Ratify the appointment of KPMG LLP special meeting and voting in person.
as auditors for fiscal 2001. Simply attending the Cohoes special
meeting will not revoke your proxy.
Record Date. You can vote at the
Hudson River annual meeting if you SHARE OWNERSHIP OF MANAGEMENT AND
owned Hudson River common stock at the DIRECTORS
close of business on June 20, 2000.
You can cast one vote for each share On June 20, 2000, the record date for
of Hudson River common stock you owned the Hudson River special meeting,
at that time. directors and executive officers of
Hudson River and their affiliates
Vote Required. Adoption of the merger beneficially owned and were entitled
agreement will require the affirmative to vote _________ shares of Hudson
vote of a majority of the outstanding River common stock, or ____% of the
Hudson River common stock. Approval of Hudson River shares outstanding on
the amendments to the Hudson River that date. The Hudson River directors
1998 Stock Option and Incentive Plan have entered into voting agreements
and the Hudson River 1998 Recognition with Cohoes whereby they have agreed
and Retention Plan and ratification of to vote at the Hudson River annual
the appointment of KPMG LLP as the meeting _________ shares of Hudson
auditors for fiscal 2001 will require River common stock owned or controlled
the affirmative vote of a majority of by them in favor of the proposal to
the shares of Hudson River common adopt the merger agreement. Hudson
stock present and voting on these River believes its executive officers
matters. Directors shall be elected by also intend to vote in favor of the
a plurality of the votes cast. proposal to adopt the merger
agreement.
Proxies. You can vote your shares at
the Hudson River annual meeting by On June 22, 2000, the record date for
marking the enclosed proxy card with the Cohoes special meeting, directors
your vote, signing it and mailing it and executive officers of Cohoes and
in the enclosed return envelope. You their affiliates beneficially owned
can revoke your proxy at any time and were entitled to vote _______
before it is voted either by sending shares of Cohoes common stock, or
to Hudson River a revocation notice or ____% of the Cohoes shares outstanding
a new proxy or by attending the Hudson on that date. The Cohoes directors
River annual meeting and voting in have entered into voting agreements
person. Simply attending the Hudson with Hudson River whereby they have
River annual meeting will not revoke agreed to vote at the Cohoes special
your proxy. meeting _________ shares of Cohoes
common stock owned or controlled by
Cohoes Shareholders them in favor of the proposal to adopt
the merger agreement. Cohoes believes
The Cohoes special meeting has been its executive officers also intend to
called for August __, 2000 at ______ vote in favor of the proposal to adopt
_.m., local time, at the Century the merger agreement.
House, 997 New Loudon Road, Latham,
New York. At
5
<PAGE>
COMPARATIVE MARKET VALUE INFORMATION
The following table sets forth the last reported sale prices per share of Hudson
River common stock and Cohoes common stock and the equivalent per share price
for Cohoes common stock giving effect to the merger on (1) April 25, 2000, the
last trading day before public announcement of the signing of the merger
agreement; and (2) July ___, 2000, the latest available date prior to the
mailing of this document. The equivalent price per Cohoes share at each
specified date in the following table represents the closing market price of a
share of Hudson River common stock on that date multiplied by the exchange ratio
of 1.185.
Hudson River Cohoes Equivalent Price per
Common Stock Common Stock Cohoes Share
April 25, 2000........ $9.75 $9.813 $11.55
July ___, 2000........ $ $ $
As of the June 20, 2000 and June 22, 2000 record dates for voting at the Hudson
River annual meeting and Cohoes special meeting, respectively, outstanding
shares of Hudson River common stock were held by approximately record owners and
7,912,255 outstanding shares of Cohoes common stock were held by approximately
4,600 record owners.
Cohoes shareholders should obtain current market quotations for Hudson River
common stock. The market price of Hudson River common stock may fluctuate
between the date of this document and completion of the merger. We cannot give
you any assurance about the market price of Hudson River common stock before or
after the merger.
6
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
This document, including information included or incorporated by reference,
contains forward-looking statements about Hudson River, Cohoes and the combined
company which we believe are within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include
information in this document regarding the financial condition, results of
operations and business of Hudson River following the consummation of the
merger. They also include statements relating to the synergies, efficiencies,
cost savings and funding advantages that are expected to be realized from the
merger and the expected impact of the merger on Hudson River's financial
performance and earnings estimates for the combined company. Forward-looking
statements are also identified by words such as "believes," "anticipates,"
"estimates," "expects," "intends," "plans" or similar expressions.
Forward-looking statements involve certain risks and uncertainties. You should
understand that the following important factors, in addition to those discussed
elsewhere in this document and in the documents which are incorporated into this
document by reference, could affect the future results of Hudson River and
Cohoes, and of Hudson River after the merger and could cause those results to
differ materially from those expressed in our forward-looking statements:
o expected cost savings from the merger may not be fully realized or may
not be realized within the expected time frame;
o revenues following the merger may be lower than expected, or
withdrawals of customer deposits, operating costs, customer loss and
business disruption following the merger may be greater than expected;
o costs or difficulties related to the integration of the businesses of
Hudson River and Cohoes may be greater than expected;
o changes in the interest rate environment may reduce margins more than
expected;
o general economic conditions, either nationally or regionally, may be
less favorable than expected, resulting in, among other things, a
deterioration in the credit quality of our loans;
o legislative or regulatory changes may adversely affect the business in
which we are engaged;
o the willingness of users to substitute our products and services for
competitors' products and services may be less than expected; and
o competitive pressure in the banking industry, and in particular our
regional market, may increase.
Further information on other factors which could affect the financial results of
Hudson River after the merger is included in the SEC filings incorporated by
reference into this document. See "Where You Can Find More Information."
7
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
Selected Historical Financial Data of Hudson River
<TABLE>
<CAPTION>
(Dollars in thousands, except for per share data) At or for the Years Ended March 31,
-----------------------------------------------------------
2000 1999 1998 1997 1996
----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Earnings
Interest income $ 76,423 $ 63,526 $ 55,387 $ 52,881 $ 49,082
Interest expense 30,509 26,000 25,977 25,426 24,086
----------- ----------- --------- --------- ---------
Net interest income 45,914 37,526 29,410 27,455 24,996
----------- ----------- --------- --------- ---------
Provision for loan losses 6,200 7,341 8,491 3,826 1,090
Other operating income 2,588 2,418 2,845 1,825 1,635
Other operating expenses 27,788 26,612 19,030 16,187 14,199
----------- ----------- --------- --------- ---------
Income before tax expense 14,514 5,991 4,734 9,267 11,342
Tax expense 4,988 2,184 1,903 3,607 4,298
----------- ----------- --------- --------- ---------
Net income $ 9,526 $ 3,807 $ 2,831 $ 5,660 $ 7,044
=========== =========== ========= ========= =========
Per Share Data (1)
Basic earnings per share $ 0.65 $ 0.17 --- --- ---
Diluted earnings per share 0.65 0.17 --- --- ---
Book value at year end 14.50 14.02 --- --- ---
Book value at year end, including unallocated ESOP
shares and unvested RRP shares 12.85 12.39 --- --- ---
Tangible book value per share at year end 13.66 13.81 --- --- ---
Tangible book value per share, including unallocated
ESOP shares and unvested RRP shares 12.11 12.21 --- --- ---
Closing market price 10.00 10.94 --- --- ---
Average Balances and Shares
Total assets $ 996,448 $ 809,385 $ 659,984 $ 640,867 $ 597,435
Earning assets 950,380 778,691 628,747 612,296 571,263
Loans 698,403 522,974 507,293 471,295 444,645
Securities available for sale 231,931 156,405 39,357 53,445 26,889
Securities held to maturity 14,899 47,738 71,966 83,343 92,243
Deposits 682,029 608,936 577,721 562,922 530,339
Short-term FHLB advances 65,542 2,916 3,699 4,459 745
Long-term FHLB borrowings 18,386 --- --- --- ---
Shareholders' equity 207,953 185,770 67,780 63,322 56,261
Shares outstanding:
Basic 14,556,648 16,302,268 --- --- ---
Diluted 14,577,742 16,302,268 --- --- ---
Financial Ratios
Return on average assets 0.96% 0.47% 0.43% 0.88% 1.18%
Return on average equity 4.58 2.05 4.18 8.94 12.52
Net interest margin 4.83 4.82 4.68 4.48 4.38
Efficiency ratio (2) 52.61 50.48 56.78 54.18 51.89
Expense ratio (2) 2.56 2.49 2.77 2.47 2.31
Equity to assets at year end 17.46 24.89 10.18 10.00 9.56
Tangible equity to tangible assets at year end 16.62 24.62 10.10 9.96 9.50
Allowance to nonperforming loans 190.50 143.77 52.32 29.37 32.57
Allowance to loans 2.38 2.47 1.62 1.19 0.79
<FN>
(1) Per share data only applies to periods since Hudson River's initial public
offering on July 1, 1998.
(2) Ratio does not include other real estate owned and repossessed property
expenses, net securities transactions, and goodwill and other intangibles
amortization for each period. The 1999 ratio does not include a charitable
contribution to the Hudson River Bank & Trust Company Foundation.
</FN>
</TABLE>
8
<PAGE>
Selected Historical Financial Data of Cohoes
<TABLE>
<CAPTION>
At March 31, At June 30,
------------------------ ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
----------- ----------- --------- --------- --------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Consolidated Financial Data:
Total assets $ 704,414 $ 628,219 $ 650,470 $535,716 $491,700 $463,363 $459,336
Cash and cash equivalents 11,970 22,731 11,114 14,229 16,664 8,900 15,179
Loans, net 577,442 489,527 521,005 412,759 398,530 393,970 379,088
Investment securities 56,096 54,921 54,455 45,424 25,273 25,969 40,052
Securities available for sale 41,225 43,147 44,742 48,720 35,475 20,886 10,433
Deposits 491,508 429,004 446,123 449,541 429,390 404,539 398,963
Borrowings 79,652 49,263 49,045 19,897 -- 2,116 6,117
Shareholders' equity 121,136 138,430 139,430 53,282 49,092 44,290 40,130
Real estate owned 697 507 724 509 1,874 421 396
Nonperforming loans 4,383 4,942 4,993 5,649 6,688 7,793 5,063
</TABLE>
<TABLE>
<CAPTION>
For the nine months
ended March 31, For the fiscal year ended June 30,
------------------------ ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
----------- ----------- --------- --------- --------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Selected Operating Data:
Interest income $ 36,628 $ 31,829 $ 43,038 $ 38,423 $ 36,285 $ 35,383 $ 32,100
Interest expense 16,443 15,531 20,334 19,262 17,821 18,164 15,405
Net interest income 20,185 16,298 22,704 19,161 18,464 17,219 16,695
Provision for loan losses 1,250 785 1,235 1,400 1,325 490 330
Net interest income after
provision for loan losses 18,935 15,513 21,469 17,761 17,139 16,729 16,365
Noninterest income 1,476 2,176 2,916 2,743 2,790 2,467 2,191
Noninterest expense 13,504 16,405 20,443 13,767 12,314 11,919 12,152
Income before income taxes 6,907 1,284 3,942 6,737 7,615 7,277 6,404
Income taxes 2,517 519 1,511 2,650 2,972 2,882 2,565
Net income $ 4,390 $ 765 $ 2,431 $ 4,087 $ 4,643 $ 4,395 $ 3,839
Selected Operating Ratios and Other Data:
Performance Ratios:
Yield on average interest-earning assets 7.36% 7.48% 7.42% 7.96% 8.04% 7.98% 7.76%
Rate paid on average interest-bearing
liabilities 3.97% 4.12% 4.06% 4.33% 4.27% 4.42% 3.99%
Net interest rate spread 3.39% 3.36% 3.36% 3.63% 3.77% 3.56% 3.77%
Net interest income after provision for loan
losses to noninterest expense 140.22% 94.56% 105.02% 129.01% 139.18% 140.36% 134.67%
Noninterest expense as a percent of average
assets 2.62% 3.71% 3.40% 2.75% 2.62% 2.59% 2.82%
Return on average assets 0.85% 0.17% 0.40% 0.82% 0.99% 0.95% 0.89%
Return on average equity 4.52% 1.25% 2.53% 7.88% 9.87% 10.28% 9.95%
Ratio of average equity to average assets 18.86% 13.89% 15.95% 10.35% 10.03% 9.28% 8.95%
Efficiency ratio 62.34% 88.80% 79.79% 62.85% 57.94% 60.55% 64.34%
Basic earnings per share(1) $ 0.53 $ 0.18 $ 0.37 N/A N/A N/A N/A
Diluted earnings per share(1) $ 0.53 $ 0.18 $ 0.37 N/A N/A N/A N/A
Dividends per share $ 0.19 N/A $ 0.06 N/A N/A N/A N/A
Dividend payout ratio 35.85% 0.00% 16.22% N/A N/A N/A N/A
Book value per share $ 15.12 $ 14.52 $ 14.62 N/A N/A N/A N/A
Weighted average shares outstanding
Basic 8,249,339 8,790,918 8,797,601 N/A N/A N/A N/A
Diluted 8,249,339 N/A N/A N/A N/A N/A N/A
Asset Quality Ratios:
Nonperforming loans as a percent of total
loans 0.76% 1.00% 0.95% 1.36% 1.66% 1.96% 1.32%
Nonperforming assets as a percent of total
assets 0.72% 0.87% 0.88% 1.15% 1.74% 1.77% 1.19%
Allowance for loan losses as a percent of
total loans 0.82% 0.77% 0.77% 0.85% 0.77% 0.82% 0.82%
Allowance for loan losses as a percent of
nonperforming loans 108.63% 76.14% 80.62% 62.54% 46.43% 41.69% 61.88%
Net loans charged-off to average loans 0.09% 0.12% 0.16% 0.24% 0.37% 0.10% 0.06%
<FN>
-------------
(1) Earnings per share for the fiscal year 1999 and the nine months ended March
31, 1999 reflects earnings since conversion.
</FN>
</TABLE>
9
<PAGE>
Unaudited Historical and Pro Forma Per Share Data
Set forth below are the book value, cash dividends, and basic and diluted
earnings per common share data for each of Hudson River and Cohoes on an
historic basis, for Hudson River on a pro forma combined basis and on a pro
forma combined basis per Cohoes equivalent share. The pro forma per Cohoes
equivalent share shows the effect of the merger from the perspective of an owner
of Cohoes common stock. The information was computed by multiplying the combined
pro forma amounts for the merger by the exchange ratio of 1.185.
<TABLE>
<CAPTION>
Combined Pro Forma
Hudson Pro Forma Per Cohoes
River as Cohoes Amounts for Equivalent
Reported as Reported the Merger Share
--------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Book value per share including unallocated ESOP
shares and unvested RRP shares at March 31,
2000..................................................... $ 12.85 $ 15.12 $ 11.56 $ 13.70
Cash dividends declared per common share for
the twelve months ended March 31, 2000................... $ 0.12 $ 0.25 $ 0.12 $ 0.14
Basic earnings per share for the twelve months
ended March 31, 2000..................................... $ 0.65 $ 0.72 $ 0.83 $ 0.98
Diluted earnings per share for the twelve months
ended March 31, 2000..................................... $ 0.65 $ 0.72 $ 0.83 $ 0.98
</TABLE>
10
<PAGE>
THE MERGER
This summary of the terms of the merger may not contain all the information that
is important to you. You should read the full text of the merger agreement which
is attached as Appendix A. This summary is qualified in its entirety by
reference to the merger agreement.
Overview of the Merger
Cohoes will be merged into Hudson River. Hudson River will be the surviving
entity of the merger, but its name will be changed to "Cohoes-Hudson Bancorp,
Inc." Each outstanding share of Cohoes common stock will be converted into the
right to receive 1.185 shares of Hudson River common stock. After this merger of
equals, current Hudson River shareholders will own approximately 62% of the
combined company and current Cohoes shareholders will own the remainder.
Merger Consideration
Each outstanding share of Cohoes common stock will be converted into the right
to receive 1.185 shares of Hudson River common stock. No fractional shares of
Hudson River common stock will be issued in the merger. Instead of a fractional
share, you will receive the cash value (without interest) of the fractional
share based on the closing price of Hudson River common stock on the last
trading day before the merger.
On ___________, 2000, Hudson River common stock closed at $______ per share.
Based on that price, the value of 1.185 shares of Hudson River common stock
would have been approximately $__________ and the aggregate market value of the
merger consideration would have been approximately $____________. These values,
however, may increase or decrease as a result of fluctuations in the market
price of Hudson River common stock.
Each outstanding option to purchase shares of Cohoes common stock will be
converted into an option to purchase 1.185 times as many shares of Hudson River
common stock. The per share exercise price will be divided by 1.185, but the
other terms and conditions of the converted option will not change. Fractional
shares will be rounded to the nearest whole share and per share exercise prices
will be rounded to the nearest whole cent. Options for 860,555 shares of Cohoes
common stock were outstanding on July ___, 2000.
Background of the Merger
Over the last several years the financial services industry has become
increasingly competitive and has undergone industry-wide consolidation. The
market in which Hudson River and Cohoes operate has been affected by this trend,
experiencing a period of rapid acquisition and consolidation that has affected
many of the banks and thrift institutions. In addition, large financial
institutions have entered this market through acquisitions of local financial
institutions. In response to these developments, the board of each of Hudson
River and Cohoes has, on an ongoing basis, considered strategic options for
increasing shareholder value, including potential acquisitions of other
institutions.
At a trade association meeting during the summer of 1999, the chief executive
officers of each of Hudson River and Cohoes discussed the possibility of
increasing shareholder value through a merger of equals of the two companies. On
the basis of this discussion, the chief financial officers of each company met
on August 3, 1999 to further explore the possibility of a business combination.
From January through March of 2000, the two chief executive officers met several
more times to explore common ground and discuss the possible terms of a merger
of equals.
On April 13, 2000, the Cohoes board formally authorized retaining Keefe Bruyette
& Woods, Inc. to act as Cohoes' financial advisor in connection with the
proposed business combination. Keefe, Bruyette & Woods, Inc. has provided
general merger and acquisition advisory services to Cohoes since the completion
of Cohoes' initial public offering in December, 1998. On April 6, 2000, the
Hudson River board authorized retaining Sandler O'Neill & Partners, L.P. to act
as Hudson River's financial advisor in connection with the proposed business
combination. Each financial advisor made an independent analysis of the
proposal. See "Opinion of Hudson River's Financial Advisor" on page __ and
"Opinion of Cohoes' Financial Advisor" on page ___.
11
<PAGE>
On April 13, 2000, the boards of each company met and considered the terms of
the proposed transaction. After consultation with each company's executive
officers and financial advisors, the consensus of each board was to move ahead
with the transaction. During the period from April 14 to April 25, 2000, the
parties negotiated the terms of the merger agreement and completed their
respective due diligence efforts.
On April 25, 2000, the board of each company met with their respective financial
advisors and special counsel to review the financial and legal arrangements of
the definitive agreement. After careful consultation, each board authorized the
execution of the merger agreement. Following the conclusion of the board
meetings, Hudson River and Cohoes executed and delivered the merger agreement
and the stock option agreements. Each director of both companies also executed a
voting agreement obligating them to vote for the adoption of the merger
agreement.
Subsequent to April 25, 2000, after the merger had been publicly announced, each
of Hudson River and Cohoes received an unsolicited acquisition proposal from
TrustCo Bank Corp NY. The proposals were exchange offers of TrustCo's common
stock equal to $14.00 per Hudson River share and $16.00 per Cohoes share. The
unsolicited TrustCo proposals were each contingent upon, among other factors,
Hudson River and Cohoes terminating its merger of equals agreement with the
other party. A week later, Cohoes received an unsolicited acquisition proposal
from Ambanc Holding Company, Inc. This proposal was a cash offer of $14.75 for
each share of Cohoes common stock. Ambanc subsequently increased its proposal to
$15.25 per share in cash and indicated that it would be willing to have the
consideration paid in a combination of cash and stock. After considering their
duties and responsibilities to shareholders, including the price of each
proposal, the respective boards of directors of Hudson River and Cohoes each
decided not to pursue any discussions with the third parties making the
proposals.
Hudson River's Reasons for the Merger
Hudson River believes that the merger will:
o create a dominant franchise with assets of approximately $1.8 billion
and a market capitalization of approximately $275 million, based on
recent market prices;
o create opportunities for significant operational benefits and
financial cost savings and revenue enhancements through the
integration of Hudson River's and Cohoes' operations;
o be immediately accretive to earnings per share estimated to be 13%
accretive to Hudson River's earnings per share, and significantly
enhance the combined company's future earnings per share growth rate;
o expand its core market area and create critical mass in upstate New
York with a strong local presence;
o strengthen its competitive and capital position in the financial
services industry, which is rapidly changing and growing more
competitive; and
o provide an additional platform for further growth.
The Hudson River board has determined that the terms of the merger and the
merger agreement and the issuance of Hudson River common stock in connection
with the merger are advisable and fair to, and in the best interests of, Hudson
River and its shareholders. In reaching its determination, the Hudson River
board considered the opinion of its financial advisor with respect to the
fairness of the exchange ratio from a financial point of view. In arriving at
its determination, the Hudson River board also considered a number of factors,
including that the merger should produce a well capitalized institution with an
enhanced retail lending franchise as well as a number of financial benefits that
should foster the potential for earnings growth. The Hudson River board did not
assign any specific or relative weights to the factors considered, and
individual directors may have given different weights to different factors. The
material factors considered were as follows:
o Information concerning the businesses, earnings, operations, financial
condition, prospects, capital levels and asset quality of Cohoes,
individually and as combined with Hudson River.
12
<PAGE>
o The opinion rendered by Hudson River's financial advisor that as of
the date of the opinion the exchange ratio was fair, from a financial
point of view, to the holders of Hudson River common stock. See
"--Opinion of Hudson River's Financial Advisor" for the assumptions
made in connection with, and limitations on, such opinion.
o The terms of the merger agreement, the stock option agreements and the
other documents executed in connection with the merger. See "The
Merger."
o The anticipated cost savings available to the combined company as a
result of the merger totaling approximately $3.6 million, consisting
of savings in (1) salaries and benefits of approximately $1.7 million;
(2) occupancy expense of approximately $104,000; (3) ESOP expense of
approximately $616,000; and (4) other operating expenses of $1.2
million.
o The current and prospective economic, competitive and regulatory
environment facing each institution and financial institutions
generally.
o The results of the due diligence investigation conducted by the
management of Hudson River, including assessment of credit policies,
asset quality, interest rate risk, litigation and adequacy of loan
loss reserves.
o The expectation that the merger would be tax-free to Hudson River and
its shareholders for federal income tax purposes. See "-- Federal
Income Tax Consequences of the Merger."
o The ability to continue to enhance shareholder value through stock
repurchase programs since the merger will be accounted for as a
purchase.
o The existence of the reciprocal stock option agreements, which might
discourage third parties from seeking to acquire Hudson River by
increasing the cost of such an acquisition and which might also
preclude any third party from being able to effect a merger with
Hudson River that would qualify for "pooling-of-interests" accounting
treatment.
o The prospects for growth and expanded products and services, and other
anticipated impacts on depositors, employees, customers and
communities served by Hudson River and Cohoes, respectively.
o Additional revenue enhancement opportunities including (1) incremental
earnings potential through the ability to leverage excess capital; (2)
trust services; (3) expansion of small business lending; (4) cash
management services; and (5) expanded legal lending limit.
Hudson River's board unanimously recommends to its shareholders that they vote
"FOR" adoption of the merger agreement and approval of the issuance of shares of
Hudson River common stock in the merger.
Cohoes' Reasons for the Merger
The Cohoes board of directors believes that the merger presents a unique
opportunity to combine two strong companies to create a dominant franchise in
the greater Albany, New York region with a commitment and the resources to
significantly enhance shareholder value.
In deciding to approve the merger agreement, the stock option agreement and the
transactions contemplated by such agreements, the Cohoes board considered the
following material factors:
o The Cohoes board's familiarity with and review of Cohoes' business,
operations, earnings, prospects, financial condition, asset quality,
and capital levels.
o The Cohoes board's review of the business, operations, prospects,
earnings, financial condition, asset quality and capital levels of
Hudson River on both an historical and a prospective basis. The Cohoes
board considered the results of the due diligence investigation
conducted by Cohoes' management and legal and
13
<PAGE>
financial advisors, including, among other things, assessments of
Hudson River's credit policies, asset quality, interest rate risk and
adequacy of loan loss reserves.
o The opportunities for expense reductions, operating efficiencies and
revenue enhancements in the combined entity, including the belief of
both parties that the merger will be immediately accretive to earnings
per share, estimated to be 16% accretive to Cohoes' earnings per
share, and significantly enhance the combined company's future
earnings per share growth rate.
o The respective contributions of each party to the combined entity,
including the 38% equity position that the Cohoes shareholders would
have in the combined entity.
o The presentation of Keefe, Bruyette & Woods, Inc., to the Cohoes board
and the opinion of Keefe, Bruyette & Woods, Inc., rendered on April
25, 2000, that, as of that date and based upon and subject to the
procedures followed, assumptions made, matters considered, and
limitations on the analyses undertaken, the exchange ratio was fair,
from a financial point of view, to the Cohoes shareholders. For a
discussion of the opinion of Keefe, Bruyette & Woods, Inc., see "-
Opinion of Cohoes' Financial Advisor."
o The complementary nature of the businesses, business strategies,
cultures and products of Cohoes and Hudson River, including the fact
that Cohoes' core deposits would enhance the combined organization's
deposit mix.
o The merger is expected to be tax-free for Cohoes for federal income
tax purposes as well as to Cohoes shareholders (except for cash paid
in lieu of fractional shares). See "-- Federal Income Tax Consequences
of the Merger."
o The nature of, and likelihood of obtaining, the regulatory approvals
that would be required with respect to the merger. See "-- Regulatory
Matters." The Cohoes board also considered the nature and scope of the
conditions to the merger and the likelihood of these conditions being
satisfied.
o The existence of the reciprocal stock option agreements, which might
discourage third parties from seeking to acquire Cohoes by increasing
the cost of such an acquisition and which might also preclude any
third party from being able to effect a merger with Cohoes that would
qualify for "pooling-of-interests" accounting treatment.
o The non-financial terms of the merger agreement, including that Cohoes
will have equal representation on the board of directors of Hudson
River, that the President and Chief Executive Officer of Cohoes will
be the Chairman and Chief Executive Officer of the combined company,
and that the name of the combined company will be Cohoes-Hudson
Bancorp, Inc.
o The current and prospective economic and competitive environment
facing the financial services industry generally, and Cohoes in
particular, including the continued rapid consolidation in the
industry and the increasing importance of operational scale and
financial resources in maintaining efficiency and remaining
competitive over the long term and in being able to capitalize on
technological developments which significantly impact industry
competition.
The Cohoes board has determined that the terms of the merger and the merger
agreement are fair to, and in the best interests of, Cohoes and its
shareholders. In reaching its determination to approve and deem advisable the
merger agreement, and to approve the stock option agreement and the transactions
contemplated therein, the Cohoes board did not assign any relative or specific
weights to the various factors considered by it, and individual directors may
have given differing weights to different factors.
Cohoes' board of directors unanimously recommends that the holders of Cohoes
common stock vote "FOR" adoption of the Merger Agreement.
14
<PAGE>
Opinion of Hudson River's Financial Advisor
By letter agreement dated as of April 13, 2000, Hudson River retained Sandler
O'Neill as an independent financial advisor in connection with Hudson River's
consideration of a possible business combination with Cohoes. Sandler O'Neill is
a nationally recognized investment banking firm whose principal business
specialty is financial institutions. In the ordinary course of its investment
banking business, Sandler O'Neill is regularly engaged in the valuation of
financial institutions and their securities in connection with mergers and
acquisitions and other corporate transactions.
Sandler O'Neill acted as financial advisor to Hudson River in connection with
the merger and participated in certain of the negotiations leading to the merger
agreement. At the request of the Hudson River Board, representatives of Sandler
O'Neill attended the April 25, 2000 meeting of the Hudson River Board at which
the Board considered and approved the merger agreement. At the meeting, Sandler
O'Neill delivered to the Hudson River Board its oral opinion, subsequently
confirmed in writing, that as of such date, the Exchange Ratio was fair to the
Hudson River shareholders from a financial point of view. Sandler O'Neill has
also delivered to the Hudson River Board a written opinion dated the date of
this proxy statement/prospectus (the "Sandler Opinion") which is substantially
identical to the April 25, 2000 opinion.
The full text of the Sandler Opinion is attached as Appendix B to this proxy
statement/prospectus. The Sandler Opinion outlines the procedures followed,
assumptions made, matters considered and qualifications and limitations on the
review undertaken by Sandler O'Neill in rendering the opinion. The Sandler
Opinion is incorporated by reference into this description of the opinion and
this description is qualified in its entirety by reference to the Sandler
Opinion. Hudson River shareholders are urged to carefully read the Sandler
Opinion in connection with their consideration of the proposed merger.
The Sandler Opinion was directed to the Hudson River Board and was provided to
Hudson River for its information in considering the merger. The Sandler Opinion
is directed only to the fairness of the Exchange Ratio to Hudson River
shareholders from a financial point of view. It does not address the underlying
business decision of Hudson River to engage in the merger or any other aspect of
the merger and is not a recommendation to any Hudson River shareholder as to how
such shareholder should vote at the Hudson River annual meeting with respect to
the merger or any other related matter.
In rendering its April 25, 2000 opinion, Sandler O'Neill performed a variety of
financial analyses. The following is a summary of the material analyses
performed by Sandler O'Neill, but is not a complete description of all the
analyses underlying Sandler O'Neill's opinion. The preparation of a fairness
opinion is a complex process involving subjective judgments as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances. The process, therefore, is not
necessarily susceptible to a partial analysis or summary description. Sandler
O'Neill believes that its analyses must be considered as a whole and that
selecting portions of the factors and analyses considered without considering
all factors and analyses, or attempting to ascribe relative weights to some or
all such factors and analyses, could create an incomplete view of the evaluation
process underlying its opinion. Also, no company included in Sandler O'Neill's
comparative analyses described below is identical to Hudson River or Cohoes and
no transaction is identical to the merger. Accordingly, an analysis of
comparable companies or transactions is not mathematical; rather, it involves
complex considerations and judgments concerning differences in financial, market
and operating characteristics of the companies and other factors that could
affect the public trading values or merger transaction values, as the case may
be, of Hudson River or Cohoes and the companies to which they are being
compared.
The earnings projections for Hudson River and Cohoes relied upon by Sandler
O'Neill in its analyses were reviewed with management and were based upon 2001
and 2002 internal projections of Hudson River and Cohoes provided to Sandler
O'Neill and on published I/B/E/S International consensus earnings estimates for
2001. For periods after 2002, Sandler O'Neill assumed an annual growth rate on
earning assets of 5.00%. The 2001 and 2002 earnings projections furnished to
Sandler O'Neill were prepared by the senior managements of Hudson River and
Cohoes for internal purposes only and not with a view towards public disclosure.
Those projections, as well as the other earnings estimates relied upon by
Sandler O'Neill in its analyses, were based on numerous variables and
assumptions which are inherently uncertain and accordingly, actual results could
vary materially from those set forth in such projections.
15
<PAGE>
In performing its analyses, Sandler O'Neill also made numerous assumptions with
respect to industry performance, business and economic conditions and various
other matters, many of which cannot be predicted and are beyond the control of
Hudson River, Cohoes and Sandler O'Neill. The analyses performed by Sandler
O'Neill are not necessarily indicative of actual values or future results, which
may be significantly more or less favorable than suggested by such analyses.
Sandler O'Neill prepared its analyses solely for purposes of rendering its
opinion and provided such analyses to the Hudson River Board at the April 25th
meeting. Estimates on the values of companies do not purport to be appraisals or
necessarily reflect the prices at which companies or their securities may
actually be sold. Such estimates are inherently subject to uncertainty and
actual values may be materially different. Accordingly, Sandler O'Neill's
analyses do not necessarily reflect the value of Hudson River common stock or
the prices at which Hudson River common stock may be sold at any time.
Summary of Proposal. Sandler O'Neill reviewed the financial terms of the
proposed transaction. Based on the closing price of Hudson River common stock on
April 24, 2000 of $9.31 and an exchange ratio of 1.185, Sandler O'Neill
calculated an implied transaction value per share of Cohoes common stock of
$11.04. The implied aggregate transaction value was approximately $88 million.
Stock Trading History. Sandler O'Neill reviewed the history of the reported
trading prices and volume of Hudson River common stock and Cohoes common stock,
and the relationship between the movements in the prices of Hudson River common
stock and Cohoes common stock, respectively, to movements in certain stock
indices, including the Standard & Poor's 500 Index, the Nasdaq Bank Index, and
the median performance of a composite group of publicly traded regional savings
institutions selected by Sandler O'Neill. During the one year period ended April
20, 2000, both the Hudson River and Cohoes common stock outperformed the Nasdaq
Bank and composite indices, and underperformed the S&P Index.
Comparable Company Analysis. Sandler O'Neill used publicly available information
to compare selected financial and market trading information for Hudson River
and Cohoes and two groups of financial institutions selected by Sandler O'Neill.
The "Regional Group" consisted of Hudson River, Cohoes, and the following 13
publicly traded regional savings institutions:
Niagara Bancorp, Inc. (1) Flushing Financial Corp. (1)
WSFS Bancorp, Inc. Parkvale Financial Corp. (1)
PennFed Financial Services, Inc. ESB Financial Corp.
OceanFirst Financial Corp. (1) Troy Financial Corp.
GA Financial Inc. Provident Bancorp, Inc.
First Bell Bancorp, Inc. (1) FMS Financial Corp.
Progress Financial Corp.
The "Highly Valued Group" consisted of the following 13 publicly traded savings
institutions which had a return on average equity (based on last twelve months'
earnings) of greater than 13.5% and a price-to-tangible book value of greater
than 134%.
First Financial Holdings Inc. (1) First Federal Capital Corp. (1)
Queens County Bancorp Inc. WSFS Financial Corp.
Andover Bancorp Inc. (1) First Essex Bancorp Inc. (1)
Medford Bancorp Inc. (1) People's Bancshares Inc.
First Bell Bancorp Inc. (1) American Bank of Connecticut (1)
Progress Financial Corp. MetroWest Bank
Coastal Financial Corp.
The analysis compared publicly available financial information for Hudson River
and the median data for each of the Regional Group and Highly Valued Group as of
and for each of the years ended December 31, 1994 through 1998 and as of and for
the twelve months ended December 31, 1999 (or as of and for the twelve months
ended March 31, 2000 where noted).
-------------------------
(1) Last twelve month information is for the period ended March 31, 2000.
16
<PAGE>
The table below sets forth the comparative data as of and for the twelve months
ended March 31, 2000. For Cohoes, the data below is as of and for the twelve
months ended December 31, 1999.
<TABLE>
<S> <C> <C> <C> <C>
Hudson
River Cohoes Regional Highly
Bancorp Bancorp Group Valued
---------- -------- --------- ----------
Total assets $1,149,547 $708,884 1,090,996 $1,248,561
Annual growth rate of total assets 30.46% (.05)% 8.02% 10.10%
Tangible equity/assets 16.45% 18.34% 7.97% 6.01%
Intangible assets/total equity 5.79% 0.00% 1.52% 1.12%
Net loans/total assets 69.96% 80.00% 65.64% 66.25%
Cash & securities/total assets 23.68% 17.57% 31.02% 30.56%
Gross loans/total deposits 110.06% 119.88% 97.98% 99.99%
Total borrowings/total assets 13.16% 12.50% 21.25% 25.68%
Non-performing assets/total assets 1.04% 0.74% 0.47% 0.48%
Loan loss reserve/gross loans 2.38% 0.78% 1.17% 1.08%
Net interest margin 4.83% 4.14% 3.27% 3.11%
Loan loss provision/average assets 0.62% 0.28% 0.12% 0.08%
Non-interest income/average assets 0.25% 0.43% 0.36% 0.48%
Non-interest expense/average assets 2.80% 2.55% 2.13% 2.27%
Efficiency ratio 52.77% 59.36% 59.02% 54.10%
Return on average assets 0.96% 0.92% 0.97% 1.09%
Return on average equity 4.58% 4.47% 10.43% 15.69%
Price/tangible book value per share 70.01% 67.66% 117.31% 155.04%
Price/earnings per share 14.71x 15.97x 9.17x 9.53x
Dividend yield 1.25% 1.79% 1.52% 3.62%
Dividend payout ratio 18.46% 26.09% 23.12% 32.25%
</TABLE>
Analysis of Selected Merger Transactions. Sandler O'Neill reviewed certain other
transactions involving publicly traded savings institutions with transaction
values greater than $15 million. Sandler O'Neill reviewed nine transactions
announced nationwide from January 1, 2000 to April 24, 2000 and three
transactions announced from January 1, 2000 to April 24, 2000 in the Mid
Atlantic and New England Regions. Sandler O'Neill also reviewed certain other
transactions involving publicly traded commercial banks and savings institutions
with transaction values greater than $15 million and less than $2 billion
involving mergers of equals. Sandler O'Neill reviewed twelve merger of equals
transactions announced nationwide for commercial banks and three merger of
equals transactions announced nationwide for savings institutions from January
1, 1998 to April 24, 2000. Sandler O'Neill reviewed and computed high, low ,
mean and median multiples and premiums for the respective groups of
transactions.
Discounted Dividend Stream and Terminal Value Analysis. Sandler O'Neill also
performed an analysis which estimated the future stream of after-tax dividend
flows of Hudson River through March 31, 2005 under various circumstances,
assuming Hudson River's current dividend payout ratio and that Hudson River
performed in accordance with the earnings forecasts reviewed with management. To
approximate the terminal value of Hudson River common stock at March 31, 2005,
Sandler O'Neill applied price/earnings multiples ranging from 8x to 19x and
applied multiples of tangible book value ranging from 50% to 175%. The dividend
income streams and terminal values were then discounted to present values using
different discount rates ranging from 9% to 15% chosen to reflect different
assumptions regarding required rates of return of holders or prospective buyers
of Hudson River common stock. As illustrated in the following table, this
analysis indicated an imputed range of values per share of Hudson River common
stock of $5.08 to $14.16 when applying the price/earnings multiples and $4.96 to
$19.23 when applying multiples of tangible book value.
17
<PAGE>
Price/Earnings Multiples Tangible Book Value Multiples
------------------------ -----------------------------
Discount Rate 8x 14x 19x .50x 1.40x 1.75x
------------- ------ ------- ------- ------ ------- -------
9% $6.61 $10.73 $14.16 $6.43 $15.65 $19.23
12 5.79 9.35 12.31 5.64 13.60 16.70
15 5.08 8.16 10.73 4.96 11.84 14.52
Sandler O'Neill discussed the above ranges of multiples with the Hudson River
board of directors, with particular focus on transactions having price/earnings
multiples of between 10x and 14x, and on transactions having tangible book value
multiples of between .75x and 1.50x.
In connection with its analysis, Sandler O'Neill considered and discussed with
the Hudson River Board how the present value analysis would be affected by
changes in the underlying assumptions, including variations with respect to the
growth rate of assets, net interest spread, non-interest income, non-interest
expenses and dividend payout ratio. Sandler O'Neill noted that the discounted
dividend stream and terminal value analysis is a widely used valuation
methodology, but the results of such methodology are highly dependent upon the
numerous assumptions that must be made, and the results thereof are not
necessarily indicative of actual values or future results.
Contribution Analysis. Sandler O'Neill reviewed the relative contributions to,
among other things, total assets, total securities, total net loans, total
deposits, total borrowings, total equity and net income to be made by Hudson
River and Cohoes to the combined institution based on data at and for the
quarter ended March 31, 2000. This analysis indicated that Hudson River's
implied contribution was 62.0% of total assets, 71.4% of total securities, 58.2%
of total net loans, 60.0% of total deposits, 65.5% of total borrowings, 62.4% of
total equity, and 61.9% of last twelve months net income. Based upon an Exchange
Ratio of 1.185, holders of the Hudson River Common Stock would own approximately
60.1% of the fully diluted outstanding shares of the combined institution.
Pro Forma Merger Analysis. Sandler O'Neill analyzed certain potential pro forma
effects of the merger, based upon an exchange ratio of 1.185, Hudson River's and
Cohoes' current and projected income statements and balance sheets, and
assumptions regarding the economic environment, accounting and tax treatment of
the merger, charges associated with the merger, operating efficiencies and other
adjustments discussed with the senior managements of Hudson River and Cohoes. As
illustrated in the following table, this analysis indicated that the merger
would be accretive to Hudson River's projected earnings per share, and slightly
dilutive to tangible book value per share for the twelve months ended March 31,
2002. Also, it indicated the merger would enhance its tangible equity ratio. The
analysis indicated that the merger would be accretive to Cohoes' projected
earnings per share and slightly dilutive to tangible book value per share for
the twelve months ended March 31, 2002. The actual results achieved by Cohoes
and Hudson River may vary from projected results and the variations may be
material.
<TABLE>
<CAPTION>
Hudson River Cohoes
-------------------------- ----------------------------
Twelve months ending March 31, 2002 Stand-alone Pro Forma Stand-alone Pro Forma(1)
----------------------------------- ------------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Projected EPS $ .87 $ .98 $ 1.00 $ 1.16
Projected tangible book value(2) $12.81 $12.64 $15.95 $14.97
Projected tangible equity ratio(2) 16.06% 16.10% NM NM
-------------------
<FN>
(1) Determined by multiplying the Hudson River pro forma values by an exchange
ratio of 1.185.
(2) Projected book values and equity ratios are at closing.
</FN>
</TABLE>
In connection with rendering its April 25, 2000 opinion, Sandler O'Neill
reviewed, among other things: (1) the merger agreement and exhibits thereto; (2)
the stock option agreements, dated April 25, 2000, by and between Hudson River
and Cohoes; (3) certain publicly available financial statements of Hudson River
and other historical financial information provided by Hudson River that they
deemed relevant; (4) certain publicly available financial statements of Cohoes
and other historical financial information provided by Cohoes that they deemed
relevant; (5) certain internal financial analyses and forecasts of Hudson River
prepared by and reviewed with management of Hudson River and the views of senior
management of Hudson River, based on certain limited discussions with certain
members of senior management, regarding Hudson River's past and current
business, financial condition, results of operations and future prospects; (6)
certain internal financial analyses and forecasts of Cohoes prepared by
18
<PAGE>
and reviewed with management of Cohoes and the views of senior management of
Cohoes, based on certain limited discussions with certain members of senior
management, regarding Cohoes' past and current business, financial condition,
results of operations and future prospects; (7) the pro forma impact of the
merger; (8) the publicly reported historical price and trading activity for
Hudson River's and Cohoes' common stock, including a comparison of certain
financial and stock market information for Hudson River and Cohoes with similar
publicly available information for certain other companies the securities of
which are publicly traded; (9) the financial terms of recent business
combinations in the banking industry, to the extent publicly available; (10) the
current market environment generally and the banking environment in particular;
and (11) such other information, financial studies, analyses and investigations
and financial, economic and market criteria as they considered relevant.
In connection with rendering the Sandler Opinion, Sandler O'Neill confirmed the
appropriateness of its reliance on the analyses used to render its April 25,
2000 opinion by performing procedures to update certain of such analyses and by
reviewing the assumptions upon which such analyses were based and the other
factors considered in rendering its opinion.
In performing its reviews and analyses, Sandler O'Neill assumed and relied upon
the accuracy and completeness of all the financial information, analyses and
other information that was publicly available or otherwise furnished to,
reviewed by or discussed with it, and Sandler O'Neill did not assume any
responsibility or liability for independently verifying the accuracy or
completeness of any of such information. Sandler O'Neill did not make an
independent evaluation or appraisal of the assets, the collateral securing
assets or the liabilities, contingent or otherwise, of Hudson River or Cohoes or
any of their respective subsidiaries, or the collectibility of any such assets,
nor was it furnished with any such evaluations or appraisals. Sandler O'Neill is
not an expert in the evaluation of allowances for loan losses and it has not
made an independent evaluation of the adequacy of the allowance for loan losses
of Hudson River or Cohoes, nor has it reviewed any individual credit files
relating to Hudson River or Cohoes. With Hudson River's consent, Sandler O'Neill
has assumed that the respective allowances for loan losses for both Hudson River
and Cohoes are adequate to cover such losses and will be adequate on a pro forma
basis for the combined entity. In addition, Sandler O'Neill has not conducted
any physical inspection of the properties or facilities of Hudson River or
Cohoes. With respect to all financial projections reviewed with each company's
management and used by Sandler O'Neill in its analyses, Sandler O'Neill assumed
that they reflected the best currently available estimates and judgments of the
respective managements of the respective future financial performances of Hudson
River and Cohoes and that such performances will be achieved. Sandler O'Neill
expressed no opinion as to such financial projections or the assumptions on
which they were based.
Sandler O'Neill's opinion was necessarily based upon market, economic and other
conditions as they existed on, and could be evaluated as of, the date of its
opinion. Sandler O'Neill assumed, in all respects material to its analysis, that
all of the representations and warranties contained in the merger agreement and
all related agreements are true and correct, that each party to such agreements
will perform all of the covenants required to be performed by such party under
such agreements and that the conditions precedent in the merger agreement are
not waived. Sandler O'Neill also assumed, with Hudson River's consent, that
there has been no material change in Hudson River's and Cohoes' assets,
financial condition, results of operations, business or prospects since the date
of the last publicly filed financial statements available to them, that Hudson
River and Cohoes will remain as going concerns for all periods relevant to its
analyses, and that the merger will be accounted for as a purchase and will
qualify as a tax-free reorganization for federal income tax purposes.
Hudson River has agreed to pay Sandler O'Neill a transaction fee in connection
with the merger, a substantial portion of which is contingent upon the closing
of the merger. Hudson River will pay Sandler O'Neill a transaction fee of
approximately $250,000, of which approximately $50,000 has been paid and the
balance will be paid when the merger is closed. Hudson River has agreed to pay
Sandler O'Neill a fee of $150,000 for rendering its fairness opinion, which
shall be credited against any transaction fee that will become due and payable
upon closing. Hudson River has also agreed to indemnify Sandler O'Neill and its
affiliates and their respective partners, directors, officers, employees,
agents, and controlling persons against certain expenses and liabilities,
including liabilities under securities laws.
Sandler O'Neill has in the past provided certain other investment banking
services to Hudson River and has received compensation for such services. In
addition, Sandler O'Neill currently provides and may in the future provide
investment banking services to Hudson River and will receive compensation for
such services. In the ordinary
19
<PAGE>
course of its business as a broker-dealer, Sandler O'Neill may also purchase
securities from and sell securities to Hudson River and Cohoes and may actively
trade the equity securities of Hudson River and Cohoes and their respective
affiliates for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
Opinion of Cohoes' Financial Advisor
In April 2000, Keefe, Bruyette & Woods, Inc. was retained by Cohoes Bancorp,
Inc. to evaluate a potential strategic combination between Cohoes and Hudson
River Keefe, Bruyette & Woods, Inc., as part of its investment banking business,
is regularly engaged in the evaluation of business and securities in connection
with mergers and acquisitions, negotiated underwritings, and distributions of
listed and unlisted securities. Keefe, Bruyette & Woods, Inc. is familiar with
the market for common stocks of publicly traded banks, thrifts and bank and
thrift holding companies. The Cohoes board selected Keefe, Bruyette & Woods,
Inc. on the basis of the firm's reputation and its experience and expertise in
transactions similar to the merger and its prior work for and relationship with
Cohoes since the conversion of Cohoes Savings Bank from mutual to stock form in
1998.
Pursuant to its engagement, Keefe, Bruyette & Woods, Inc. was asked to render an
opinion as to the fairness, from a financial point of view, of the merger
consideration to shareholders of Cohoes. Keefe, Bruyette & Woods, Inc. delivered
its opinion to the Cohoes board that, as of April 25, 2000, the merger
consideration is fair, from a financial point of view, to the shareholders of
Cohoes. No limitations were imposed by the Cohoes Board upon Keefe, Bruyette &
Woods, Inc. with respect to the investigations made or procedures followed by it
in rendering its opinion. Keefe, Bruyette & Woods, Inc. has also delivered to
the Cohoes board of directors a written opinion dated the date of this proxy
statement/prospectus (the "KBW Opinion"), which is substantially identical to
its April 25, 2000 opinion. Keefe, Bruyette & Woods, Inc. has consented to the
inclusion herein of the summary of its opinion to the Cohoes Board and to its
entire opinion being attached hereto as Appendix C.
The full text of the opinion of Keefe, Bruyette & Woods, Inc., which is attached
as Appendix C to this proxy statement/prospectus, sets forth certain assumptions
made, matters considered and limitations on the review undertaken by Keefe,
Bruyette & Woods, Inc., and should be read in its entirety. The summary of the
opinion of Keefe, Bruyette & Woods, Inc. set forth in this proxy
statement/prospectus is qualified in its entirety by reference to the opinion.
Cohoes shareholders are urged to carefully read the KBW Opinion in connection
with their consideration of the proposed merger.
The KBW Opinion was directed to the Cohoes Board and was provided to Cohoes for
its information in considering the merger. The KBW Opinion is directed only to
the fairness of the exchange ratio to Cohoes shareholders from a financial point
of view. It does not address the underlying business decision of Cohoes to
engage in the merger or any other aspect of the merger and is not a
recommendation to any Cohoes shareholder as to how such shareholder should vote
at the Cohoes special meeting with respect to the merger or any other related
matter.
In rendering its opinion, Keefe, Bruyette & Woods, Inc. (1) reviewed the merger
agreement, (2) reviewed Cohoes' annual reports, proxy statements and Form 10-K's
since completing its initial public offering in December 1998 and Hudson River
annual reports, proxy statements and Form 10-K's since it completed its initial
public offering in July 1998 and certain other information considered relevant,
(3) discussed with senior management and the boards of directors of Cohoes and
its wholly-owned subsidiary, Cohoes Savings Bank, the current position and
prospective outlook for Cohoes to enhance future shareholder value, (4)
discussed with senior management of Hudson River their operations, financial
performance and future plans and prospects, (5) considered historical
quotations, levels of activity and prices of recorded transactions in Cohoes'
and Hudson River's common stock, (6) reviewed financial and stock market data of
other thrifts in a comparable asset range to Cohoes and Hudson River, (7)
reviewed certain recent business combinations of strategic alliance transactions
which Keefe, Bruyette & Woods, Inc. deemed comparable in whole or in part, and
(8) performed other analyses which Keefe, Bruyette & Woods, Inc. considered
appropriate.
In rendering its opinion, Keefe, Bruyette & Woods, Inc. assumed and relied upon
the accuracy and completeness of the financial information provided to it by
Cohoes and Hudson River. In its review, with the consent of the Cohoes. Board,
Keefe, Bruyette & Woods, Inc. did not undertake any independent verification of
the information provided
20
<PAGE>
to it, nor did it make any independent appraisal or evaluation of the assets or
liabilities, and potential or contingent liabilities of Cohoes or Hudson River.
The following is a summary of the material analyses performed by Keefe, Bruyette
& Woods, Inc., but is not a complete description of all the analyses underlying
Keefe, Bruyette & Woods, Inc.'s opinion. The preparation of a fairness opinion
is a complex process involving subjective judgments as to the most appropriate
and relevant methods of financial analysis and the application of those methods
to the particular circumstances. The process, therefore, is not necessarily
susceptible to a partial analysis or summary description. Keefe, Bruyette &
Woods, Inc. believes that its analyses must be considered as a whole and that
selecting portions of the factors and analyses considered without considering
all factors and analyses, or attempting to ascribe relative weights to some or
all such factors and analyses, could create an incomplete view of the evaluation
process underlying its opinion. Also, no company included in Keefe, Bruyette &
Woods, Inc.'s comparative analyses described below is identical to Cohoes or
Hudson River and no transaction is identical to the merger. Accordingly, an
analysis of comparable companies or transactions is not mathematical; rather, it
involves complex considerations and judgments concerning differences in
financial, market and operating characteristics of the companies and other
factors that could affect the public trading values or merger transaction
values, as the case may be, of Cohoes or Hudson River and the companies to which
they are being compared. . Keefe, Bruyette & Woods, Inc. presented the following
analyses:
Pro Forma Analysis of Affiliation. Keefe, Bruyette & Woods, Inc. analyzed
certain pro forma effects resulting from the strategic alliance. This analysis,
based upon historical annualized March 31, 2000 quarterly results and estimates
for the next three to five years for Cohoes and Hudson River based upon business
plan assumptions provided by management of each institution, projected an
earnings per share accretion of 16% for the twelve months ended March 31, 2002
for Cohoes. This assumes annual cost savings of $3.6 million (pre-tax). The
purpose of this analysis is to project the financial effects of the merger on
the balance sheet and income statement of Cohoes and the per share impact on the
stock of Cohoes. The outcome of this analysis, both independently as well as in
conjunction with other analyses, partially formulates the basis for Keefe,
Bruyette & Woods, Inc.'s opinion.
Regional Group Analysis. Keefe, Bruyette & Woods, Inc. reviewed the financial
performance of Cohoes based on various financial measures of asset size,
earnings performance, tangible equity/assets, market pricing ratios, market
capitalization, dividend-related ratios and deposit market share to all
publicly-traded thrift institutions headquartered in New York (25 in the group).
This analysis showed among other things, that as of March 31, 2000, Cohoes and
the combined company compared as follows:
<TABLE>
<CAPTION>
Tangible Market Price to Price to Dividend
Assets Equity/Assets Capitalization EPS Book Yield
--------- ------------- ---------------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cohoes $ 704 18.34% $ 84 million 18.7x 67.6% 2.87%
Combined Company 1,800 15.88 230 million N/A N/A N/A
Median 915 9.30 113 million 11.7 113.8 2.57
</TABLE>
Analysis of Selected Merger of Equals Transactions. Keefe, Bruyette & Woods,
Inc. analyzed 18 merger of equals transactions which occurred between thrift
institutions since 1995. Keefe, Bruyette & Woods, Inc. reviewed the terms of the
merger transactions with regard to the respective parties in each transaction
and the pro forma effect of each transaction. The merger of equals transactions
reviewed by Keefe, Bruyette & Woods, Inc. included the following: Golden State
Bancorp, Inc./First Nationwide Holdings, Dime Bancorp, Inc./Anchor Bancorp,
Inc., Charter One Financial, Inc./FirstFed Michigan Corporation, Associated
Banc-Corp/First Financial Corporation, Hudson Chartered Bancorp,
Inc./Progressive Bank, Inc., Pinnacle Financial Services/Indiana Federal
Corporation, Hinsdale Financial Corporation/Liberty Bancorp, Inc., Security
Capital Bancorp/Omni Capital Group, Coal City Corporation/Avondale Financial
Corp., Main Street Community Bancorp, Inc./Lexington Savings Bank, Fidelity
Financial of Ohio, Inc./Glenway Financial Corp., FCB Financial Corp./OSB
Financial Corp, TriState Bancorp/First Savings Bancorp, Mutual Bancorp of the
Berkshires, Inc./Lenox Financial Services Corporation, North Country Savings
Bank/Canton Federal Savings & Loan Association, Liberty National Bank/Key
Florida Bancorp, Inc., Perpetual Federal Savings & Loan Association/Progressive
Federal Savings Bank, and Peoples Building Loan & Savings Company/Oakley
Improved Building & Loan Company.
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Based on the above information Keefe, Bruyette & Woods, Inc. concluded that the
merger consideration was fair from a financial point of view relative to
comparable transactions. Further, the fairness analysis considered (1) the
relative market performance of the thrift stocks in general, especially small
cap stocks, over the past year; (2) the relative historical returns on equity of
Cohoes and Hudson River and (3) the expected performance of each company given
additional considerations such as the business plan, asset mix, net interest
margin, net interest spread and asset quality. The summary does not purport to
be a complete description of the analysis performed by Keefe, Bruyette & Woods,
Inc. and should not be construed independently of the other information
considered by Keefe, Bruyette & Woods, Inc. in rendering its opinion. Selecting
portions of Keefe, Bruyette & Woods, Inc.'s analysis or isolating certain
aspects of the comparable transactions, without considering all analysis and
factors, could create an incomplete or potentially misleading view of the
evaluation process.
In preparing its analysis, Keefe, Bruyette & Woods, Inc. made numerous
assumptions with respect to industry performance, business and economic
conditions and other matters, many of which are beyond the control of Keefe,
Bruyette & Woods, Inc., Cohoes and Hudson River. The analyses performed by
Keefe, Bruyette & Woods, Inc. are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses and do not purport to be appraisals or reflect the prices at
which a business may be sold.
Keefe, Bruyette & Woods, Inc. will receive a fee of approximately $250,000 for
services rendered in connection with advising and issuing a fairness opinion
regarding the merger. As of the date of this proxy statement/prospectus, Keefe,
Bruyette & Woods, Inc. has received $100,000 of such fee, and the remainder of
the fee is due upon closing of the merger. In addition, Keefe, Bruyette & Woods,
Inc. has provided general merger and acquisition advisory services to Cohoes
since the completion of Cohoes' initial public offering in December 1998, for
which Keefe, Bruyette & Woods, Inc. will receive a $175,000 fee upon closing of
the merger.
Accounting and Tax Treatment
This summary of the federal income tax consequences of the merger may not
contain all the information that is important to you. It is not a complete
analysis or listing of all potential tax effects of the merger agreement; it
does not address tax consequences to persons subject to special treatment under
tax laws (such as dealers in securities, banks, insurance companies, tax-exempt
organizations, non-United States persons and shareholders who acquired their
shares as compensation); and it does not address the tax laws of any state,
local or foreign jurisdiction. It is based upon the Internal Revenue Code,
treasury regulations and administrative rulings and court decisions as of the
date of this document, all of which are subject to change. Cohoes shareholders
should consult their tax advisors as to the particular effect of their own
particular facts and circumstances on the federal income tax consequences of the
merger to them, and also as to the effect of any state, local, foreign and other
federal tax laws.
The merger will be treated as a purchase under generally accepted accounting
principles. Under current federal income tax law, based upon assumptions and
representations made by Hudson River and Cohoes, and assuming that the merger is
consummated in the manner set forth in the merger agreement, it is anticipated
that the following federal income tax consequences would result:
o the merger will qualify as a reorganization under Section 368(a) of
the Internal Revenue Code;
o no gain or loss will be recognized by Hudson River or Cohoes as a
result of the merger;
o no gain or loss will be recognized by any Cohoes shareholder upon the
exchange of Cohoes common stock solely for Hudson River common stock
in the merger;
o the aggregate tax basis of Hudson River common stock received will be
the same as the basis of the Cohoes common stock surrendered in
exchange (subject to any adjustments required as the result of receipt
of cash in lieu of a fractional share interest in Hudson River common
stock);
o the holding period of the shares of Hudson River common stock received
will include the holding period of the Cohoes common stock surrendered
in exchange, provided that the surrendered shares of Cohoes common
stock were held as a capital asset at the time of the merger; and
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o cash received in the merger in lieu of a fractional share interest
will be treated as having been received as a distribution in full
payment in exchange for the fractional share interest, and will
qualify as capital gain or loss (assuming the Cohoes common stock
surrendered in exchange was held as a capital asset by the shareholder
at the time of the merger).
Each of Hudson River and Cohoes have received an opinion from its tax counsel
that the merger will have the anticipated tax consequences. Each counsel has
based its opinion upon representations made by Hudson River and Cohoes and upon
the assumption that the merger will be consummated in accordance with the terms
of the merger agreement. Both opinions are based entirely upon the Internal
Revenue Code, regulations then in effect or proposed under the Internal Revenue
Code, then current administrative rulings and practice and judicial authority,
all of which are subject to change, possibly with retroactive effect. It is a
condition to the merger agreement that each of Hudson River and Cohoes receive
an updated opinion from its tax counsel as of the effective time of the merger,
based upon the federal tax laws then in effect. You can find the details of the
tax opinion requirement in Section 7.1(f) of Appendix A.
No ruling has been or will be requested from the IRS. Unlike a ruling from the
IRS, the opinions of counsel are not binding on the IRS. There can be no
assurance that the IRS will not take a position contrary to the positions
reflected in such opinions or that such opinions would be upheld by the courts
if challenged.
Corporate Structure after the Merger
The merger will combine Hudson River and Cohoes into a single corporation under
the name "Cohoes-Hudson Bancorp, Inc." We also plan to merge Cohoes' savings
bank subsidiary into Hudson River's savings bank subsidiary.
Immediately after the merger, the combined corporation will have six pre-merger
Hudson River directors selected by the pre-merger Hudson River board and six
pre-merger Cohoes directors selected by the pre-merger Cohoes board. The merger
agreement also includes amendments to Hudson River's certificate of
incorporation designed to maintain this arrangement for six years, and
designates current officers of Hudson River and Cohoes as the initial officers
of the post-merger corporation. You can find the details of our plans for the
post-merger corporation in Section 2.2 of Appendix A. The amendments to Hudson
River's certificate of incorporation are discussed on page ___ and included as
Appendix D.
Regulatory Matters
Hudson River is subject to regulation and supervision by the Office of Thrift
Supervision as a savings and loan holding company. Hudson River Bank & Trust
Company and Cohoes Savings Bank are New York chartered savings banks regulated
by the New York State Banking Department and the Federal Deposit Insurance
Corporation. The merger of Cohoes with and into Hudson River must be approved by
the Office of Thrift Supervision and the New York State Banking Department. The
merger of Cohoes Savings Bank with and into Hudson River Bank & Trust Company
must be approved by the Federal Deposit Insurance Corporation and the New York
State Banking Department. In their reviews, the Office of Thrift Supervision,
the Federal Deposit Insurance Corporation and the New York State Banking
Department will evaluate, among other things, the financial and managerial
resources of the parties, the convenience and needs of the communities to be
served and the performance of the subsidiary banks under the Community
Reinvestment Act.
Federal law prohibits the approval of a merger if it would result in a monopoly
or be in furtherance of any combination or conspiracy to monopolize or to
attempt to monopolize the business of banking in any part of the United States,
or if its effect in any section of the country may be substantially to lessen
competition or to tend to create a monopoly, or if it would in any other manner
result in a restraint of trade, unless the anti-competitive effects of the
proposed merger are clearly outweighed in the public interest by the probable
effect of the transaction in meeting the convenience and needs of the
communities to be served.
The bank merger may not be consummated for a period of 30 days after receipt of
the final approval of the Federal Deposit Insurance Corporation, unless no
adverse comment has been received from the Department of Justice, in which case
the merger may be consummated on or after the 15th day after such final
approval.
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The merger cannot proceed in the absence of the requisite regulatory approvals.
There can be no assurance that all regulatory approvals will be obtained or the
dates of those approvals. There can also be no assurance that regulatory
approvals received will not contain a condition or requirement that causes such
approvals to fail to satisfy the conditions set forth in the merger agreement.
See "The Merger Agreement -- What We Must Do to Complete the Merger."
Obligations of the Post-Merger Corporation
If the merger is completed:
o The post-merger corporation must indemnify former officers, directors
and employees of the parties and their subsidiaries.
o The post-merger corporation must provide employment benefits to
persons who were employees of Hudson River or Cohoes or their
respective subsidiaries immediately prior to the merger.
You can find the details of these obligations in Sections 6.9 and 6.11 of
Appendix A.
What We Must Do to Complete the Merger
To complete the merger we must:
o Obtain approvals from the shareholders of both companies.
o Obtain regulatory approvals (without burdensome conditions) from each
of the Office of Thrift Supervision, the Federal Deposit Insurance
Corporation and the New York State Banking Department.
o Obtain federal and state authorization to issue shares in the merger.
o Obtain tax opinions from legal counsel.
o Obtain Nasdaq National Market approval to list the Hudson River shares
to be issued in the merger.
o Avoid any material adverse effect on either of our companies.
o Avoid any breach of our representations and warranties.
o Fulfill our obligations under the merger agreement.
o Exchange customary documents at closing.
You can find details of the conditions to the merger in Article VII of Appendix
A. We cannot guarantee that all of these conditions will be satisfied or waived.
Amendments to Hudson River's Certificate of Incorporation
This summary may not include all of the information that is important to you.
You should read the complete text of the amendments to Hudson River's
certificate of incorporation which is included as Appendix D to this document.
Delaware law permits a plan of merger to include amendments to the certificate
of incorporation of the surviving corporation. We have included such amendments
in the merger agreement. If the merger is completed, these amendments will
become effective when the certificate of merger is filed with the Delaware
Secretary of State.
o The surviving corporation will be named "Cohoes-Hudson Bancorp, Inc."
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o Immediately following the merger the board of the surviving
corporation will be made up of six directors designated by the
pre-merger board of Hudson River and six directors designated by the
pre-merger board of Cohoes.
o For six years following the merger the balance between former Hudson
River directors and former Cohoes directors will be preserved by:
o allowing each group to fill its own vacancies between shareholder
elections;
o nominating all incumbents for reelection by the shareholders, subject
to the fiduciary duties of the board of directors;
o allowing each group to choose its own replacement nominees if an
incumbent does not stand for reelection; and
o when possible, filling vacancies and choosing nominees from among the
other former directors of Hudson River or Cohoes.
Interests of Directors and Officers in the Merger that are Different from Your
Interests
Employment Agreements. Hudson River and Hudson River Bank have entered into
employment agreements with Harry L. Robinson, Carl A. Florio, Richard A. Ahl,
Timothy E. Blow and Sidney D. Richter, which will become effective when the
merger becomes effective and will replace the present employment agreements of
these persons.
Harry L. Robinson. Harry L. Robinson's employment agreement has a term of
six years which, until the third anniversary of the merger, will be extended
daily for one additional day, unless Cohoes-Hudson and Hudson River Bank give
notice to Mr. Robinson that the daily extensions will cease, or Mr. Robinson
gives a similar notice to Cohoes-Hudson and Hudson River Bank. Extensions of the
term also will cease automatically if Mr. Robinson's employment is terminated
for any reason. In addition, if by the sixth anniversary of the merger, no
change in control of Cohoes-Hudson or Hudson River Bank has occurred, Mr.
Robinson will retire as Chairman of the Board of Cohoes-Hudson, as Vice Chairman
of the Board of Hudson River Bank and as an officer or employee of Cohoes-Hudson
and Hudson River Bank and the term of his employment agreement will expire on
that date.
Mr. Robinson's employment agreement provides that he will serve as Chairman of
the Board of Directors of Cohoes-Hudson and as a Vice Chairman of the Board of
Directors of Hudson River Bank during the term of his employment agreement, and
will serve as the Chief Executive Officer of Cohoes-Hudson and Hudson River Bank
during the three years following the merger. In these positions, he will have
the authority and responsibilities prescribed by the By-laws of Cohoes-Hudson
and Hudson River Bank and that are customary for such positions. Beginning on
the third anniversary of the merger, the Boards of Directors of Cohoes-Hudson
and Hudson River Bank will have the right to elect Mr. Robinson as Co-Chief
Executive Officer and to elect an additional Co-Chief Executive Officer of
Cohoes-Hudson and Hudson River Bank. Six months after the third anniversary of
the merger, Mr. Robinson's right to serve as Chief Executive Officer or Co-Chief
Executive Officer will end but he will continue to serve as Chairman of the
Board of Directors of Cohoes-Hudson and as a Vice Chairman of the Board of
Directors of Hudson River Bank during the remaining term of his employment
agreement.
Mr. Robinson will receive an annual salary that is at least $460,000 and is
equal to the salary paid to the President of Cohoes-Hudson and Hudson River
Bank. Mr. Robinson will also be entitled to participate in benefit plans and
programs on the same terms as apply to the President of Cohoes-Hudson and Hudson
River Bank, including payment of country club dues and use of a company
automobile. In the event that, during the term of his employment agreement, Mr.
Robinson's employment is terminated by the Board of Directors of Cohoes-Hudson
or Hudson River Bank without cause, or Mr. Robinson resigns for any of the
reasons specified below, he will be entitled to receive as liquidated damages
continued group life, health and disability benefits and a cash lump sum payment
to compensate him for the loss of salary (on a present value basis), cash bonus
and incentive compensation and qualified and non-qualified retirement plan
benefits (on a present value basis) for not more than three years. In
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addition, if Cohoes-Hudson elects to cause Mr. Robinson to surrender his
outstanding options and shares of restricted stock, Cohoes-Hudson will pay him
the value of his outstanding options and his shares of restricted stock, whether
vested or not.
The reasons specified in Mr. Robinson's employment agreement that would justify
his resigning and receiving the liquidated damages described above are a failure
to elect him to the positions in which he has a right to serve under his
employment agreement, a failure to vest in him the authority and
responsibilities associated with those positions, a failure to nominate or elect
him as a director of Cohoes-Hudson or Hudson River Bank, a change in his
principal place of employment to a location more than 25 miles from the
Cohoes-Hudson executive offices to be established in the vicinity of Albany, New
York, or the liquidation, dissolution, bankruptcy, or insolvency of
Cohoes-Hudson or Hudson River Bank.
If within one year before or at any time after a change in control of
Cohoes-Hudson or Hudson River Bank but prior to the sixth anniversary of the
merger, Mr. Robinson's employment with Cohoes-Hudson or Hudson River Bank is
terminated without cause or he resigns for one of the reasons specified above
that justifies his resigning and receiving the liquidated damages described
above, he will be entitled to receive, in addition to any liquidated damages, a
lump sum payment equal to the greater of (1) the salary and cash bonus or
incentive compensation he would have received if his employment had continued
until the sooner of the expiration of the term of his employment agreement or
the third anniversary of the termination of his employment or (2) 299% of his
average annual gross income from Cohoes-Hudson or its predecessor during the
past five full calendar years before the change in control. In the event that
due to a change in control, any amount paid or payable to Mr. Robinson is
subject to the 20% excise tax under Section 4999 of the Internal Revenue Code,
then he will be entitled to an additional payment such that on an after-tax
basis, he is indemnified for the excise tax.
Mr. Robinson's employment agreement contains a covenant not to compete, under
which he agrees that if his employment terminates before the expiration of the
term of his employment agreement, he will not compete with Cohoes-Hudson and
Hudson River Bank in any county in which either of them maintains an office
until the expiration of the sooner of two years from the date on which his
employment terminates or the date on which the term of his employment agreement
would otherwise expire. In addition, for two years after his employment
terminates, he will not solicit customers of Cohoes-Hudson or Hudson River Bank
or solicit employees of Cohoes-Hudson or its affiliates to accept other
employment in the counties where Cohoes-Hudson and Hudson River Bank maintain
offices.
Carl A. Florio. Carl A. Florio's employment agreement has a term of six
years, beginning on the date of the merger, and the term is extended daily
thereafter unless Cohoes-Hudson and Hudson River Bank give notice to Mr. Florio
that the daily extensions will cease, or Mr. Florio gives a similar notice to
Cohoes-Hudson and Hudson River Bank. Extensions of the term also will cease
automatically if Mr. Florio's employment is terminated for any reason.
Mr. Florio's employment agreement provides that he will serve as a Vice Chairman
of the Board of Directors and as the President of Cohoes-Hudson and as a Vice
Chairman of the Board of Directors and as the President of Hudson River Bank
during the term of his employment agreement. As President, he will have the
authority and responsibilities prescribed by the By-laws of Cohoes-Hudson and
Hudson River Bank and that are customary for such positions. Beginning on the
third anniversary of the merger, the Boards of Directors of Cohoes-Hudson and
Hudson River Bank, to the extent permitted by their fiduciary duties, will elect
Mr. Florio as Co-Chief Executive Officer (and as President) if Mr. Robinson is
also serving as Co-Chief Executive Officer of Cohoes-Hudson and Hudson River
Bank. Upon the earlier of (a) six months after the third anniversary of the
merger or (b) the date that Mr. Robinson no longer serves as either the Chief
Executive Officer or Co-Chief Executive Officer of Cohoes-Hudson and Hudson
River Bank, the Boards of Directors of Cohoes-Hudson and Hudson River Bank, to
the extent permitted by their fiduciary duties, will elect Mr. Florio as sole
Chief Executive Officer and as President of Cohoes-Hudson and Hudson River Bank.
As sole Chief Executive Officer and President, he will have the authority and
responsibilities prescribed by the By-laws of Cohoes-Hudson and Hudson River
Bank and that are customary for such positions.
Mr. Florio will receive an annual salary that is at least $460,000 and is equal
to the salary paid to Mr. Robinson. Mr. Florio will also be entitled to
participate in benefit plans and programs of Cohoes-Hudson and Hudson River
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Bank, including payment of country club dues and use of a company automobile. In
the event that, during the term of his employment agreement, Mr. Florio's
employment is terminated by the Board of Directors of Cohoes-Hudson or Hudson
River Bank without cause, or Mr. Florio resigns for any of the same reasons
specified in Mr. Robinson's employment agreement, he will be entitled to receive
the same liquidated damages as provided in Mr. Robinson's employment agreement,
except that if Mr. Florio resigns due to the failure of Hudson-Cohoes or Hudson
River Bank to elect him to the position of Co-Chief Executive Officer or Chief
Executive Officer, whichever is applicable, as provided above, then he will
receive liquidated damages of $3,000,000 in a lump sum payment instead of
receiving a lump sum payment of up to three years salary (on a present value
basis) and cash bonus or incentive compensation.
If within one year before or at any time after a change in control of
Cohoes-Hudson or Hudson River Bank during the term of his employment agreement,
Mr. Florio's employment with Cohoes-Hudson or Hudson River Bank is terminated
without cause or he resigns for one of the reasons that justifies his resigning
and receiving liquidated damages, he will be entitled to receive, in addition to
any liquidated damages, the same change in control lump sum payment and excise
tax indemnification payment as provided for in Mr. Robinson's employment
agreement.
Mr. Florio's employment agreement contains the same covenant not to compete and
agreement not to solicit employees and customers as provided for in Mr.
Robinson's agreement.
Richard A. Ahl. Richard A. Ahl's employment agreement has a term of three
years, beginning on the date of the merger, and the term is extended daily
thereafter unless Cohoes-Hudson and Hudson River Bank give notice to Mr. Ahl
that the daily extensions will cease, or Mr. Ahl gives a similar notice to
Cohoes-Hudson and Hudson River Bank. Extensions of the term also will cease
automatically if Mr. Ahl's employment is terminated for any reason.
Mr. Ahl's employment agreement provides that he will serve as the Chief
Operating Officer and Executive Vice President of Cohoes-Hudson and of Hudson
River Bank during the term of his employment agreement. Mr. Ahl will receive an
annual salary that is at least $230,000. Mr. Ahl will also be entitled to
participate in benefit plans and programs of Cohoes-Hudson and Hudson River
Bank. In the event that, during the term of his employment agreement, Mr. Ahl's
employment is terminated by the Board of Directors of Cohoes-Hudson or Hudson
River Bank without cause, or Mr. Ahl resigns for any of the same reasons
specified in Mr. Robinson's employment agreement that are applicable to him, he
will be entitled to receive the same type of liquidated damages as provided for
in Mr. Robinson's employment agreement.
If in connection with or within 18 months after a change in control of
Cohoes-Hudson or Hudson River Bank during the term of his employment agreement,
Mr. Ahl's employment with Cohoes-Hudson or Hudson River Bank is terminated
without cause or he resigns for one of the reasons that justifies his resigning
and receiving liquidated damages, he will be entitled to receive, in addition to
any liquidated damages, a lump sum payment equal to the greater of (1) the
salary and cash bonus or incentive compensation he would have received if his
employment had continued until the expiration of the term of his employment
agreement or (2) 299% of his average annual gross income from Cohoes-Hudson or
its predecessor during the past five full calendar years before the change in
control. He will also be entitled to receive an excise tax indemnification
payment as provided for in Mr. Robinson's employment agreement.
Mr. Ahl's employment agreement contains the same covenant not to compete and
agreement not to solicit employees and customers as provided for in Mr.
Robinson's agreement.
Sidney D. Richter. Sidney D. Richter's employment agreement is the same as
Mr. Ahl's employment agreement, except that (a) he will serve as Executive Vice
President of Cohoes-Hudson and as Executive Vice President and the Senior Loan
Officer of Hudson River Bank, (b) his annual salary will be at least $160,000
and (c) he will be entitled to resign and receive liquidated damages if his
principal place of employment is changed to a location more than 25 miles from
the main office of Hudson River Bank (as opposed to the executive offices of
Hudson-Cohoes in the Albany, New York vicinity).
Timothy E. Blow. Timothy E. Blow's employment agreement is the same as Mr.
Ahl's employment agreement, except that (a) he will serve as the Chief Financial
Officer of Cohoes-Hudson and of Hudson River
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Bank, (b) his annual salary will be at least $150,000, (c) the term of his
employment is two years (rather than three years), subject to daily extension,
and (d) his lump sum payment upon termination of his employment in connection
with or within 18 months after a change in control will be equal to the greater
of (1) the salary and cash bonus or incentive compensation he would have
received if his employment had continued until the expiration of the term of his
employment agreement or (2) 200% of his average annual gross income from
Cohoes-Hudson or its predecessor during the past five full calendar years before
the change in control.
Director Emeritus Plan. Prior to the consummation of the merger, Hudson
River will adopt a Director Emeritus Plan. Each director of Cohoes, Hudson
River, Cohoes Savings Bank and Hudson River Bank (and the sole director emeritus
of Cohoes and each director emeritus of Hudson River selected by its Board of
Directors) who does not become a director of Cohoes-Hudson or Hudson River Bank
upon consummation of the merger or the bank merger will be entitled to become a
director emeritus of Cohoes-Hudson under the plan. The term of each director
emeritus will be six years, or three years if his or her prior service with
Cohoes, Hudson River, Cohoes Savings Bank or Hudson River Bank was less than
three years. Each director emeritus will receive an annual retainer of $31,500,
and, subject to change by the Board of Directors of Cohoes-Hudson, will be
entitled to attend regular meetings of the Board. If a director emeritus dies
during his or her term, the retainer will be paid to his or her beneficiary or
estate. If Carl A. Florio or Harry L. Robinson ceases to be a director of both
Cohoes-Hudson and Hudson River Bank before all shares of restricted stock
granted to him by Hudson River or Cohoes, whichever the case may be, prior to
the merger have vested, he will be entitled to become a director emeritus and
receive the annual retainer under the plan until all such shares have vested or
have been acquired by Cohoes-Hudson under his employment agreement. In addition,
if Harry L. Robinson ceases to be a director of both Cohoes-Hudson and Hudson
River Bank before all shares of restricted stock granted to him by Cohoes-Hudson
at the effective time of the merger have vested, he will be entitled to become a
director emeritus and receive the annual retainer under the plan until all such
shares have vested or have been acquired by Cohoes-Hudson under his employment
agreement, unless his employment is terminated for cause or he voluntarily
terminates his employment without good reason during the six years following the
merger or resigns as a director.
Stock Options. On the date the merger is consummated, Cohoes-Hudson will
grant:
o to each person other than Harry L. Robinson who is a director or
director emeritus of Cohoes immediately before the merger, an option
to acquire 7,490 shares of common stock of Cohoes-Hudson at an
exercise price equal to the greater of $16.44 per share or the market
value of such stock on the date the option is granted,
o to Harry L. Robinson an option to acquire 45,816 shares of common
stock of Cohoes-Hudson at an exercise price equal to the greater of
$19.19 per share or the market value of such stock on the date the
option is granted, and
o to Richard A. Ahl an option to acquire 16,660 shares of common
stock of Cohoes-Hudson at an exercise price equal to the greater of
$22.07 per share or the market value of such stock on the date the
option is granted.
Each option will vest in four equal installments on January 5, 2001, 2002, 2003
and 2004 in accordance with Hudson's present option plan, and will expire on
January 5, 2009.
Restricted Stock. On the date the merger is consummated, Cohoes-Hudson will
grant shares of restricted stock as follows:
o to each director of Cohoes (other than Harry L. Robinson) and to
the sole emeritus director of Cohoes, 9,083 shares,
o to Harry L. Robinson, 71,888 shares, and
o to Richard A. Ahl, 32,373 shares.
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For each person who serves as a director emeritus of Cohoes-Hudson, such shares
of Cohoes-Hudson restricted stock will vest in equal (or substantially equal)
annual installments during the six years following the merger. For all other
persons, the shares of Cohoes-Hudson restricted stock will vest in nine equal
(or substantially equal) annual installments commencing January 5, 2001. As a
condition to the granting of shares of Cohoes-Hudson restricted stock as
described above to Harry L. Robinson, Richard A. Ahl and to each person who will
serve as a director of Cohoes-Hudson or Hudson River Bank, such person must
enter into an agreement to modify the vesting schedule of his or her existing
Cohoes restricted stock to conform to the nine year vesting schedule for the
shares of Cohoes-Hudson restricted stock described above.
Other Provisions of the Merger Agreement
Although the completion of the merger requires shareholder approval, many
provisions of the merger agreement became effective immediately upon its
signing. Your vote was not required to make these provisions binding obligations
of Hudson River and Cohoes.
Representations and Warranties. Each party has made representations and
warranties to the other party with respect to various matters, including its
financial statements, capital structure, business, loans, investments,
regulatory filings and benefit plans. These representations and warranties must
be true and correct upon both signing of the merger agreement and the completion
of the merger. A party can terminate the merger agreement if the other party's
representations and warranties are not true and correct because of a material
adverse effect on that other party. If the merger is completed, or if the merger
agreement is terminated for some unrelated reason, the representations and
warranties become void. You can find details of these obligations in Articles
III, IV and V of Appendix A.
Cooperation and Conduct of Business. Each party has agreed to cooperate in
completing the merger and to avoid extraordinary transactions between the
signing of the merger agreement and the completion of the merger. These
provisions become void if the merger is completed. These provisions also become
void if the merger agreement is terminated, except for those related to
confidentiality, joint press releases and shared expenses. You can find details
of these obligations in Article VI of Appendix A.
Waiver and Amendment. Section 8.4 of Appendix A allows either party to
extend the time for the performance of any obligation by the other party, and to
waive (to the extent permitted by law) any condition or obligation of the other
party. Section 8.5 allows the boards of the parties to amend the merger
agreement without shareholder vote so long as the merger consideration is not
changed and the effect on the shareholders is not materially adverse.
Termination. The merger agreement may be terminated by mutual agreement of
the parties (even after shareholder approval), or by a non-breaching party under
any of the following circumstances:
o In response to a material breach which is not cured within 30 days.
o If any required regulatory or shareholder approval is denied.
o If the merger is not completed by February 28, 2001.
You can find details of the termination provisions in Sections 8.1, 8.2 and
8.3 to Appendix A.
The Stock Option Agreements
To increase the likelihood that the merger will be completed, and to discourage
other persons who may be interested in combining with either party, each of
Hudson River and Cohoes has granted the other a conditioned option to purchase
up to 19.9% of the outstanding shares of its common stock at a fixed price equal
to the closing sales price of the common stock of the respective parties on
April 24, 2000. These options are intended to make it more likely that the
merger will be completed on the agreed terms and to compensate a party for its
efforts and costs in case the merger is not completed due to a third party
proposal for a business combination with the other party. The options may
therefore discourage proposals for alternative business combinations, even if a
third party were prepared to
29
<PAGE>
offer Hudson River or Cohoes more favorable terms. Copies of the Stock Option
Agreements are attached to this document as Appendices D and E. These agreements
become void if the merger is completed.
Exchange of Certificates
We will appoint an exchange agent to handle the exchange of Cohoes stock
certificates for Hudson River stock certificates and the payment of cash for any
fractional share. Promptly after the merger is completed, the exchange agent
will send to each holder of Cohoes common stock a letter of transmittal for use
in the exchange and instructions explaining how to surrender Cohoes certificates
to the exchange agent. Holders of Cohoes common stock that surrender their
certificates to the exchange agent, together with a properly completed letter of
transmittal, will receive the appropriate merger consideration. Holders of
unexchanged shares of Cohoes common stock will not be entitled to receive any
dividends or other distributions payable by Hudson River after the effective
time until their certificates are surrendered. However, when those certificates
are surrendered for shares of Hudson River common stock, any unpaid dividends or
distributions will be paid, without interest.
Cohoes common stock certificates should not be returned with the enclosed proxy
and should not be forwarded to the exchange agent until you receive the
transmittal form.
Resales of Hudson River Common Stock by Affiliates of Cohoes
The shares of Hudson River common stock to be issued in the merger will be
registered under the Securities Act and will be freely transferable under the
Securities Act, except for shares issued to any shareholder who may be deemed to
be an "affiliate" of Cohoes for purposes of Rule 145 under the Securities Act as
of the date of the Cohoes special meeting. Affiliates of Cohoes may not sell
their shares of Hudson River common stock acquired in the merger except pursuant
to an effective registration statement under the Securities Act covering those
shares or in compliance with Rule 145 or another applicable exemption from the
registration requirements of the Securities Act. Persons who may be deemed to be
affiliates of Cohoes generally include individuals or entities that control, are
controlled by or are under common control with Cohoes, and may include certain
officers and directors of Cohoes as well as certain principal shareholders of
Cohoes.
Dissenters' Rights
Delaware law does not grant dissenters' rights to the shareholders of either
company.
30
<PAGE>
COMPARATIVE STOCK PRICES AND DIVIDEND INFORMATION
Hudson River common stock and Cohoes common stock are traded on the Nasdaq
National Market (symbols: HRBT and COHB, respectively). The following table sets
forth the reported high and low sales prices of shares of Hudson River common
stock and Cohoes common stock, as reported on the Nasdaq National Market, and
the quarterly cash dividends per share declared, in each case for the periods
indicated.
<TABLE>
<CAPTION>
Hudson River Cohoes
Common Stock (1) Common Stock (2)
--------------------------- ---------------------------
High Low Dividends High Low Dividends
-------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1999 Fiscal Year
First Quarter............................... $ -- $ -- $ -- $ -- $ -- $ --
Second Quarter.............................. 13.75 9.38 -- -- -- --
Third Quarter............................... 11.75 8.75 -- -- -- --
Fourth Quarter.............................. 12.00 10.06 -- 13.00 10.38 --
2000 Fiscal Year
First Quarter............................... 11.75 9.88 0.03 12.00 9.25 0.06
Second Quarter.............................. 12.13 10.75 0.03 13.13 11.56 0.06
Third Quarter............................... 11.25 9.75 0.03 12.63 9.38 0.06
Fourth Quarter.............................. 10.56 9.50 0.03 10.31 9.38 0.07
2001 Fiscal Year
First Quarter (through June 14,
2000)....................................... 11.00 8.75 0.05 14.69 9.69 0.07
<FN>
-------------
(1) The Hudson River common stock started trading in July 1998.
(2) The Cohoes common stock started trading in January 1999.
</FN>
</TABLE>
The timing and amount of future dividends will depend upon earnings, cash
requirements, the financial condition of Hudson River and its subsidiaries,
applicable government regulations and other factors the Hudson River board
considers relevant. The dividend policies on the Hudson River common stock are
subject to the discretion of the Hudson River board of directors. The merger
agreement provides that the initial dividend on the Cohoes-Hudson Bancorp, Inc.
common stock will be $0.06 per share for the first full quarterly dividend
following completion of the merger, and that neither party will increase their
regular quarterly cash dividends prior to completion of the merger without the
other party's consent.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial statements (pro
forma financial statements) are based on the historical financial statements of
Hudson River and Cohoes and have been prepared to illustrate the effect of the
merger. Consummation of the merger is subject to a number of conditions, and no
assurance can be given that the merger will be consummated on the currently
anticipated terms, or at all.
The following unaudited pro forma condensed combined balance sheet as of March
31, 2000 is based on the unaudited historical consolidated balance sheets of
Hudson River and Cohoes at that date, assuming that the merger had been
consummated on March 31, 2000 and accounted for using the purchase method of
accounting.
The unaudited pro forma condensed combined income statement reflects the
combination of the historical results of operations of Hudson River for the
fiscal year ended March 31, 2000, and of Cohoes for the twelve months ended
March 31, 2000.
The unaudited pro forma condensed combined income statement gives effect to the
merger using the purchase method of accounting and assume that (1) the merger
occurred as of the beginning of the period presented, and (2) the amount of
initial negative goodwill equaled the amount reflected in the unaudited pro
forma condensed combined balance sheet as of March 31, 2000.
31
<PAGE>
These pro forma financial statements should be read in conjunction with the
historical financial statements and related notes of Hudson River and Cohoes
incorporated by reference in this joint proxy statement/prospectus.
As noted above, the merger will be accounted for using the purchase method of
accounting. Accordingly, the pro forma adjustments made for the purpose of
preparing the pro forma financial statements are based upon certain assumptions
and estimates regarding the amount of negative goodwill (which represents the
excess of the fair value of the net assets acquired over the total acquisition
cost) which will arise from the merger and the period over which such negative
goodwill will be accreted. The actual negative goodwill arising from the merger
will be based on the excess of the fair value of the net assets acquired over
the total acquisition cost, based on fair value estimates and other information
determined as of the date the merger is consummated. For purposes of the pro
forma financial statements, the fair value of Cohoes' assets and liabilities was
estimated based upon information available as of March 31, 2000. The actual fair
value adjustments to the assets and liabilities of Cohoes will be made on the
basis of appraisals and evaluations that will be made as of the date the merger
is consummated and may, therefore, differ significantly from those reflected in
these pro forma financial statements. In the opinion of Hudson's management, the
estimates used in the preparation of these pro forma financial statements are
reasonable under the circumstances.
The combined company expects to achieve benefits from the merger including
operating cost savings and revenue enhancements. The pro forma earnings set
forth in this section do not reflect any potential cost savings or revenue
enhancements which are expected to result from the combination of operations of
Hudson River and Cohoes and, accordingly, may not be indicative of the results
of future operations. No assurances can be given with respect to the ultimate
level of cost savings or revenue enhancements to be realized. As a result, the
unaudited pro forma condensed combined income statement is not necessarily
indicative of either the results of operations that would have occurred had the
merger been effective at the beginning of the respective periods or of future
results of the combined company. In addition, the consummation of the merger is
subject to satisfaction of a number of conditions, and no assurance can be given
that the merger will be consummated on the currently anticipated terms, or at
all.
32
<PAGE>
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2000
<TABLE>
<CAPTION>
Hudson River Cohoes Pro Forma Footnote Pro Forma
(In thousands) Bancorp, Inc. Bancorp, Inc. Adjustments Reference Combined
---------- ----------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 16,612 $ 11,970 $ $ 28,582
Securities available for sale, at fair value 236,980 36,287 54,591 1 327,858
Securities held to maturity 11,144 56,096 (56,096) 1 11,144
Federal Home Loan Bank of New York stock, at cost 7,425 4,938 12,363
Loans receivable 823,855 582,203 (10,779) 2 1,395,279
Allowance for loan losses (19,608) (4,761) (24,369)
---------- ---------- -------- ----------
Net loans receivable 804,247 577,442 (10,779) 1,370,910
---------- ----------- -------- ----------
Accrued interest receivable 6,470 4,053 10,523
Premises and equipment, net 18,719 7,725 (7,725) 3 18,719
Other real estate owned and repossessed property 1,641 697 2,338
Goodwill and other intangibles 11,618 1,747 (1,747) 3 11,618
Other assets 34,691 3,459 6,365 4 44,515
---------- ----------- -------- ----------
Total assets $1,149,547 $ 704,414 $(15,391) $1,838,570
========== =========== ======== ==========
Liabilities and Shareholders' Equity
Liabilities:
Deposits $ 748,563 $ 491,508 $ 917 5 $1,240,988
Securities sold under agreements to repurchase 4,214 -- 4,214
Short-term FHLB advances 116,450 31,280 147,730
Long-term FHLB borrowings 30,600 48,372 (5,716) 6 73,256
Mortgagors' escrow deposits 5,500 6,669 12,169
Negative goodwill 19,882 19,882
Other liabilities 43,497 5,449 2,500 7 51,446
---------- ----------- --------- ----------
Total liabilities 948,824 583,278 17,583 1,549,685
---------- ----------- --------- ----------
Total shareholders' equity 200,723 121,136 (32,974) 8 288,885
---------- ----------- --------- ----------
Total liabilities and shareholders' equity $1,149,547 $ 704,414 $ (15,391) $1,838,570
========== =========== ========= ==========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
33
<PAGE>
Unaudited Pro Forma Condensed Combined Income Statement for the Twelve Months
Ended March 31, 2000
<TABLE>
<CAPTION>
Hudson River Cohoes Pro Forma Footnote Pro Forma
(In thousands) Bancorp, Inc. Bancorp, Inc. Adjustments Reference Combined
---------- ----------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 59,660 $ 41,519 $ 1,540 2 $ 102,719
Securities available for sale 15,432 2,280 3,668 1 21,380
Securities held to maturity 982 3,367 (3,367) 1 982
Federal funds sold 12 366 378
Federal Home Loan Bank of New York stock 337 305 642
-------- -------- -------- ---------
Total interest income 76,423 47,837 1,841 126,101
-------- -------- -------- ---------
Interest expense:
Deposits 25,613 17,118 (917) 5 41,814
Securities sold under agreements to repurchase 84 -- 84
Short-term FHLB advances 3,700 1,346 5,046
Long-term FHLB borrowings 1,112 2,782 817 6 4,711
-------- -------- -------- ---------
Total interest expense 30,509 21,246 (100) 51,655
-------- -------- -------- ---------
Net interest income 45,914 26,591 1,941 74,446
Provision for loan losses 6,200 1,700 7,900
-------- -------- -------- ---------
Net interest income after provision for loan losses 39,714 24,891 1,941 66,546
-------- -------- -------- ---------
Other operating income:
Service charges on deposit accounts 1,519 850 2,369
Loan servicing income 142 495 637
Net securities transactions 83 (8) 75
Net gain on sales of loans held for sale -- 25 25
Accretion of negative goodwill -- -- 1,988 3 1,988
Other income 844 1,046 1,890
-------- -------- -------- ---------
Total other operating income 2,588 2,408 1,988 6,984
-------- -------- -------- ---------
Other operating expenses:
Compensation and benefits 13,763 10,394 24,157
Occupancy 1,805 1,583 (399) 9 2,989
Equipment 2,453 1,485 (907) 9 3,031
OREO and repossessed property expenses 1,228 337 1,565
Advertising 922 477 1,399
Legal and other professional fees 791 817 1,608
Postage and item transportation 709 239 948
Goodwill and other intangibles amortization 1,087 224 (224) 9 1,087
Other expenses 5,030 2,178 7,208
-------- -------- -------- ---------
Total other operating expenses 27,788 17,734 (1,530) 43,992
-------- -------- -------- ---------
Income before tax expense 14,514 9,565 5,459 29,538
Tax expense 4,988 3,509 1,402 5 9,899
-------- -------- -------- ---------
Net income $ 9,526 $ 6,056 $ 4,057 $ 19,639
======== ======== ======== =========
Basic earnings per share $ 0.65 $ 0.72 10 $ 0.83
Diluted earnings per share $ 0.65 $ 0.72 10 $ 0.83
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
34
<PAGE>
___________________
1. Represents the reclassification of Cohoes' securities held to maturity
portfolio as securities available for sale, at estimated fair value. The
securities are assumed to have a weighted-average life of 5 years and the
fair value adjustment (discount) is accreted on a straight line basis over
this time period into interest on securities available for sale.
2. Represents the estimated fair value adjustment relating to Cohoes' loan
portfolio. The estimated life of this portfolio is assumed to be 7 years.
The adjustment is assumed to accrete on a straight line basis over this
time period into interest and fees on loans.
3. Negative goodwill generated by the excess of the fair value of the net
assets acquired over the cost of the acquired institution is allocated to
all noncurrent, nonmonetary assets of Cohoes. Premises and equipment and
goodwill and other intangibles of Cohoes are the only noncurrent,
nonmonetary assets identified and the values are reduced accordingly. The
adjustments to estimate the amount of negative goodwill used in the
preparation of the unaudited pro forma condensed combined balance sheet are
summarized below (dollars in thousands, except per share data):
Shares of Cohoes common stock outstanding 7,912,255
Exchange ratio 1.185
---------------
Equivalent number of Hudson River common shares 9,376,022
Per share price of Hudson River common stock $ 9.52
---------------
Consideration for Cohoes common stock outstanding $ 89,260
Total equity (net assets) of Cohoes as of March 31, 2000 $ (121,136)
Estimated fair value of stock options exchanged $ 2,794
Exchange of Cohoes unvested restricted stock for
Hudson River unvested restricted stock $ (3,892)
---------------
Estimated negative goodwill before transaction
costs, fair value adjustments, and allocations to
noncurrent, nonmonetary assets $ (32,974)
Estimated transaction costs $ 2,500
Estimated fair value adjustments $ 7,485
Allocation to Cohoes' noncurrent, nonmonetary assets:
Premises & equipment $ 7,725
Goodwill and other intangibles $ 1,747
Estimated tax effect of fair value adjustments and allocations $ (6,365)
---------------
Estimated negative goodwill $ (19,882)
===============
The estimated negative goodwill is assumed to be accreted into income over
a period of 10 years, the estimated period of benefit. The accretion of the
negative goodwill is not taxable.
4. Represents the estimated income tax effects of the estimated purchase
accounting adjustments at an assumed marginal tax rate of 40%. The tax
expense or benefit is reflected in the pro forma income statement during
the period that the related purchase accounting adjustments are assumed to
be accreted or amortized, respectively.
5. Represents the estimated fair value adjustment relating to Cohoes' time
deposits. The weighted average remaining maturity of these time deposits is
assumed to be 12 months. The adjustment is assumed to accrete on a straight
line basis over this time period as a reduction of interest expense on
deposits.
6. Represents the estimated fair value adjustment relating to Cohoes'
long-term borrowings. The weighted average remaining maturity of these
borrowings is assumed to be 7 years. The adjustment is assumed to amortize
on a straight line basis over this time period as an increase to interest
expense on long-term borrowings.
7. Represents an estimated liability related to the settlement of certain
employment agreements, investment banking, legal and accounting fees, and
severance benefits in conjunction with the closing of the transaction.
8. Represents the elimination of Cohoes' equity as of the date of the
transaction, offset by the issuance of 9,376,022 shares of Hudson River
common stock at an average market price of $9.52. The average market price
was obtained by averaging the closing market price of Hudson River common
stock before, after and including the date of the announcement. Amount also
includes the estimated fair value of Hudson River stock options exchanged
for outstanding Cohoes stock options valued as of the date of the
announcement using the Black-Scholls option pricing model, as well as the
effect of the exchange of Cohoes unvested restricted stock for Hudson River
unvested restricted stock.
9. Represents the amount of expense recorded by Cohoes during the 12 months
ended March 31, 2000 relating to depreciation on buildings and equipment
and the amortization of goodwill and other intangibles. These amounts are
eliminated from the pro forma income statement as the negative goodwill
generated from the transaction has been allocated to eliminate Cohoes'
premises and equipment and goodwill and other intangibles.
10. Basic earnings per share is calculated utilizing Hudson River's
weighted-average shares outstanding for the year ended March 31, 2000 of
14,556,648 combined with the shares issued for Cohoes common shares
outstanding of 9,376,022, less 408,792 shares of unvested restricted stock
exchanged in the transaction. Diluted earnings per share is calculated
utilizing Hudson River's weighted-average shares giving effect to potential
common shares outstanding for the year ended March 31, 2000 of 14,577,742
combined with the shares issued for Cohoes common shares outstanding of
9,376,022, less 408,792 shares of unvested restricted stock exchanged in
the transaction.
35
<PAGE>
COMPARISON OF SHAREHOLDER RIGHTS
The following is a summary of the material differences between the current
rights of Cohoes shareholders and those of Hudson River shareholders after the
merger. This summary may not contain all of the information that is important to
you. For a full description of the rights of Cohoes and Hudson River
shareholders, you must refer to the governing laws and documents listed below.
We will send you a copy of the Hudson River and Cohoes certificates of
incorporation and bylaws without charge at your request.
Hudson River and Cohoes are Delaware corporations with substantially similar
certificates of incorporation and bylaws. After the merger, the rights of former
Cohoes shareholders will be governed by the Hudson River certificate of
incorporation and bylaws, as amended by the merger agreement.
<TABLE>
<S> <C>
Cohoes Hudson River after the Merger
------------------------- ----------------------------------------------------- --------------------------------------------------
Governing Law Delaware General Corporation Law.
------------------------- ----------------------------------------------------- --------------------------------------------------
Governing Cohoes certificate; Hudson River certificate;
Documents Cohoes bylaws. Hudson River bylaws.
------------------------- ---------------------------------------------------------------------------------------------------------
Amendment of Amendment of either certificate of incorporation generally requires
Governing both a recommendation from the board and an affirmative vote of a
Documents majority of the outstanding stock. In addition, several provisions of
each certificate require the affirmative vote of 80% of the outstanding
stock to amend.
Amendment of either bylaws requires a majority of the
board or the affirmative vote of 80% of the
outstanding stock.
------------------------- ---------------------------------------------------------------------------------------------------------
Common Stock 25,000,000 shares authorized; 7,912,255 40,000,000 shares authorized; 15,546,560
shares outstanding as of June 22, 2000. shares outstanding as of June 20, 2000.
------------------------- ----------------------------------------------------- --------------------------------------------------
Preferred Stock 5,000,000 shares authorized; no shares outstanding.
Without shareholder approval, the board of directors
may both:
o Set the rights and preferences of various
series of preferred stock; and
o Issue preferred stock.
------------------------- ---------------------------------------------------------------------------------------------------------
Limitation on If any person beneficially owns more than 10% of the common stock, those shares in excess
Stock Ownership of 10% may not be voted.
------------------------- ---------------------------------------------------------------------------------------------------------
Preemptive None.
Rights
------------------------- ---------------------------------------------------------------------------------------------------------
Appraisal Rights Only as granted by Delaware law.
Number of As determined by the affirmative vote of a For six years following the merger:
Directors majority of the total number of directors Twelve directors.
which the corporation would have if there
were no vacancies.
------------------------- ----------------------------------------------------- --------------------------------------------------
Classification of Three classes, as nearly equal as possible, with the terms of one class expiring at each
Directors annual meeting.
------------------------- ---------------------------------------------------------------------------------------------------------
Election of Directors are elected by a plurality of the votes cast. Cumulative voting is not permitted.
Directors
------------------------- ---------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
<TABLE>
<S> <C>
------------------------- ----------------------------------------------------- --------------------------------------------------
Nomination of No restrictions. For six years following the merger:
Directors by the Incumbents are nominated for reelection,
Company subject to the board's fiduciary duties. The
former directors of Hudson River and Cohoes each
form a group, and each group selects the
company nominees for any vacancies among its
own members.
After six years:
No restrictions.
------------------------- ----------------------------------------------------- --------------------------------------------------
Removal of Only for cause and only by 80% of the voting stock.
Directors
------------------------- ----------------------------------------------------- --------------------------------------------------
Board Vacancies Filled by the majority vote of the directors then in office.
------------------------- ----------------------------------------------------- --------------------------------------------------
Special Meetings May be called only by the affirmative vote of a majority of the
of Shareholders total number of directors which the corporation would have if
there were no vacancies.
------------------------- ----------------------------------------------------- --------------------------------------------------
Notice Generally, shareholder must give over 60 Generally, shareholder must give over 90
Requirements days notice of nominations or proposals. days notice of nominations or proposals.
------------------------- ---------------------------------------------------------------------------------------------------------
Quorum One-third of all shares entitled to vote.
------------------------- ---------------------------------------------------------------------------------------------------------
Action by Shareholder action by written consent without a shareholder meeting is
Consent not permitted.
------------------------- ---------------------------------------------------------------------------------------------------------
Business Each certificate provides that any business combination with an
Combinations "interested person" (generally, a beneficial owner of 10% of the
voting stock) requires the affirmative vote of 80% of the outstanding
shares unless it is either approved by the board or meets specific fairness
criteria.
Delaware law also restricts the ability of persons holding 15% or more of a
company's stock to engage in a business combination with the company for a period
of three years.
Each certificate grants the board flexibility to consider social factors
and effects on third parties in evaluating any business combination.
------------------------- ---------------------------------------------------------------------------------------------------------
Greenmail Each certificate provides that any purchase of company securities
from an "interested person" (generally, a beneficial owner of 5% of the
voting stock) requires the affirmative vote of 80% of the outstanding
shares unless it meets specific fairness criteria.
------------------------- ---------------------------------------------------------------------------------------------------------
</TABLE>
AMENDMENTS TO THE HUDSON RIVER 1998 STOCK OPTION AND INCENTIVE PLAN AND
THE HUDSON RIVER 1998 RECOGNITION AND RETENTION PLAN
Hudson River shareholders are being asked to approve increases in the number of
shares available under (a) Hudson River's 1998 Stock Option and Incentive Plan
from 1,785,375 to 1,930,241, and (b) Hudson River's 1998 Recognition and
Retention Plan (RRP) from 714,150 to 918,324. All other features of the two
plans will remain the same, and the plans are described below.
The Hudson River board is recommending these increases in the number of shares
because Hudson River has agreed to grant additional options and awards to
certain executive officers and directors of Cohoes under the merger agreement.
See "The Merger - Interests of Directors and Officers in the Merger that are
Different from Your Interests" for a discussion of who will receive the awards
and the amount of the awards.
The Hudson River board unanimously recommends that Hudson shareholders vote
"FOR" the amendment of these two plans.
37
<PAGE>
Description of the 1998 Stock Option and Incentive Plan
This summary of the 1998 Stock Option and Incentive Plan may not contain all the
information that is important to you. You should read the full text of the plan
which is attached as Appendix G. This summary is qualified in its entirety by
reference to the plan.
Principal Features of the Stock Option Plan. The Stock Option Plan provides
for awards in the form of stock options, stock appreciation rights and limited
stock appreciation rights. Each award shall be on such terms and conditions,
consistent with the Stock Option Plan and applicable New York State Banking
Board and FDIC regulations, as the committee administering the Stock Option Plan
may determine. Subject to certain exceptions described herein, awards made under
such plan generally vest at a rate of no quicker than one-fifth of the initial
award per year, subject to the participant maintaining continuous service with
Hudson River or its subsidiaries from the date of grant.
Shares awarded pursuant to the Stock Option Plan may be either authorized but
unissued shares or reacquired shares held by Hudson River in its treasury. Any
shares subject to an award which expires or is terminated unexercised will again
be available for issuance under the Stock Option Plan or any other plan of
Hudson River or its subsidiaries. Generally, no award or any right or interest
therein is assignable or transferable except under certain limited exceptions
set forth in the Stock Option Plan.
The Stock Option Plan is administered by the Compensation Committee of the board
of Hudson River. Pursuant to the terms of the Stock Option Plan, any director,
officer or employee of Hudson River or its affiliates is eligible to participate
in the Stock Option Plan. Accordingly, there are currently 338 persons eligible
to participate in the Plan. In granting awards under the Stock Option Plan, the
Compensation Committee considers, among other things, position and years of
service, value of the participant's services to Hudson River and the bank and
the added responsibilities of such individuals as employees, directors and
officers of a public company.
Stock Options. Under the terms of the Stock Option Plan, the Compensation
Committee may grant either "incentive stock options" as defined under Section
422 of the Internal Revenue Code or stock options not intended to qualify as
such ("non-qualified stock options").
In general, stock options will not be exercisable after the expiration of their
terms. The term of stock options may not exceed ten years from the date of
grant. Unless otherwise determined by the Compensation Committee, in the event a
participant ceases to maintain continuous service (as defined in the Stock
Option Plan) with Hudson River or one of its affiliates, for any reason
(excluding death, disability and termination for cause), an exercisable stock
option will continue to be exercisable for three months thereafter but in no
event after the expiration date of the option. Unless otherwise provided by the
Compensation Committee, in the event that continuous service terminates as a
result of the disability of a participant, all options not then exercisable
shall become exercisable in full and remain exercisable for a period of one year
from the date of such disability. Unless otherwise provided by the Compensation
Committee, in the event of death of a participant, all options not then
exercisable shall become exercisable in full. Unless otherwise provided by the
Compensation Committee, in the event of the death of a participant during such
service or within the three-month period described above following termination
of service described above, an exercisable option will continue to be
exercisable for one year, to the extent exercisable by the participant upon his
death, but in no event later than ten years after grant. Following the death of
any participant, the Compensation Committee may, as an alternative means of
settlement of an option, elect to pay to the holder thereof an amount of cash
equal to the amount by which the market value of the shares covered by the
option on the date of exercise exceeds the exercise price. A stock option will
automatically terminate and will no longer be exercisable as of the date a
participant is notified of termination for cause.
The exercise price for the purchase of shares subject to a stock option at the
date of grant may not be less than 100% of the market value of the shares
covered by the option on that date. The exercise price must be paid in full in
cash or, if permitted by the Compensation Committee, shares of common stock, or
a combination of both.
Stock Appreciation Rights (SARs). The Compensation Committee may grant SARs
at any time, whether or not the participant then holds stock options, granting
the right to receive the excess of the market value of the shares represented by
the SARs on the date exercised over the exercise price. SARs generally will be
subject to the
38
<PAGE>
same terms and conditions and exercisable to the same extent as stock options,
as described above. Upon the exercise of a SAR, the participant will receive the
amount due in cash or shares, or a combination of both, as determined by the
Compensation Committee. SARs may be related to stock options, in which case the
exercise of one will reduce to that extent the number of shares represented by
the other.
SARs will require an expense accrual by Hudson River each year for the
appreciation on the SARs which it is anticipated will be exercised. The amount
of the accrual is dependent upon whether and the extent to which the SARs are
granted and the amount, if any, by which the market value of the SARs exceeds
the exercise price.
Limited Stock Appreciation Rights. Limited SARs will be exercisable only
for a limited period in the event of a tender or exchange offer for shares of
Hudson River's common stock, other than by Hudson River, where 25% or more of
the outstanding shares are acquired in that offer or any other offer which
expires within 60 days of that offer. The amount paid on exercise of a limited
SAR will be the excess of (a) the market value of the shares on the date of
exercise, or (b) the highest price paid pursuant to the offer, over the exercise
price. Payment upon exercise of a limited SAR will be in cash.
Limited SARs may be granted at the time of, and must be related to, the grant of
a stock option or SAR. The exercise of one will reduce to that extent the number
of shares represented by the other. Subject to vesting requirements contained in
New York State Banking Board and FDIC regulations, limited SARs will be
exercisable only for the 45 days following the expiration of the tender or
exchange offer, during which period the related stock option or SAR will be
exercisable. However, no limited SAR will be exercisable by a director, senior
officer or ten percent beneficial owner of Hudson River within six months of the
date of its grant.
Effect of Merger and Other Adjustments. Shares as to which awards may be
granted under the Stock Option Plan, and shares then subject to awards, will be
adjusted appropriately by the Compensation Committee in the event of any merger,
consolidation, reorganization, recapitalization (including a return of capital,
whether non-taxable or otherwise), combination or exchange of shares, stock
dividend, stock split or other change in the corporate structure or common stock
of Hudson River.
In the event of any merger, consolidation or combination of Hudson River with or
into another company or other entity, whereby either Hudson River is not the
continuing entity or its outstanding shares of common stock are converted into
or exchanged for different securities, cash or property, or any combination
thereof, pursuant to a plan or agreement the terms of which are binding upon all
shareholders, any participant to whom a stock option or SAR has been granted at
least six months prior to such event will have the right upon exercise of the
option or SAR (subject to the terms of the Stock Option Plan and any other
limitation or vesting period applicable to such option or SAR) to an amount
equal to the excess of fair market value on the date of exercise of the
consideration receivable in the merger, consolidation or combination with
respect to the shares covered or represented by the stock option or SAR over the
exercise price of the option or SAR multiplied by the number of shares with
respect to which the option or SAR has been exercised.
Amendment and Termination. The board of Hudson River may at any time amend,
suspend or terminate the Stock Option Plan or any portion thereof, subject to
compliance with New York State Banking Board and FDIC regulations, but may not,
without the prior ratification of the shareholders, make any amendment which
shall (1) increase the aggregate number of securities which may be issued under
the Stock Option Plan (except as specifically set forth under the Stock Option
Plan), (2) materially change the requirements as to eligibility for
participation in the Stock Option Plan or (3) change the class of persons
eligible to participate in the Stock Option Plan, provided, however, that no
such amendment, suspension or termination shall impair the rights of any
participant, without his consent, in any award made pursuant to the Stock Option
Plan. Unless previously terminated, the Stock Option Plan shall continue in
effect for a term of ten years, after which no further awards may be granted
under the Stock Option Plan.
Federal Income Tax Consequences. Under present federal income tax laws,
awards under the Stock Option Plan will have the following consequences:
(1) The grant of an award, by itself, will generally neither result in the
recognition of taxable income to the participant nor entitle Hudson River
to a deduction at the time of such grant.
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(2) In order to qualify as an incentive stock option, a stock option awarded
under the Stock Option Plan must meet the conditions contained in Section
422 of the Internal Revenue Code, including the requirement that the shares
acquired upon the exercise of the stock option be held for at least one
year after the date of exercise and at least two years after the grant of
the option. The exercise of an incentive stock option will generally not,
by itself, result in the recognition of taxable income to the participant
nor entitle Hudson River to a deduction at the time of such exercise.
However, the difference between the exercise price and the fair market
value of the option shares on the date of exercise is an item of adjustment
which may, in certain situations, trigger the alternative minimum tax. The
alternative minimum tax is incurred only when it exceeds the regular income
tax.
(3) If the shares are held by the participant for at least one year after the
incentive stock option is exercised and two years after the incentive stock
option was granted, the participant will recognize a long-term capital gain
or loss upon disposition of the shares and Hudson River will not be
entitled to a corresponding deduction. The capital gain will be considered
long-term if the shares are held for more than 12 months. The amount of
such gain or loss will be equal to the difference between the amount
realized by the participant upon disposition of the shares and the amount
paid by the participant for such shares.
(4) If the shares acquired upon exercise of an incentive stock option are not
held for at least one year after transfer of such shares to the participant
and two years after the grant of the incentive stock option, the
participant generally will recognize ordinary income or loss upon
disposition of the shares in an amount equal to the difference between the
exercise price and the fair market value of the shares on the date of
exercise. In such an event, Hudson River will generally be entitled to a
corresponding deduction, provided Hudson River meets its federal tax
reporting obligations. The participant will also recognize capital gain or
loss equal to the difference, if any, between the sale price and the fair
market value of the shares on the date of exercise of the incentive stock
option; such capital gain or loss will be characterized as short- or
long-term depending on how long the shares are held after the date of
exercise of the incentive stock option. Hudson River will not be entitled
to a corresponding deduction for such capital gain or loss.
(5) The exercise of a non-qualified stock option will result in the recognition
of ordinary income by the participant on the date of exercise in an amount
equal to the difference between the exercise price and the fair market
value on the date of exercise of the shares acquired pursuant to the stock
option. Hudson River will be allowed a deduction at the time and in the
amount of any ordinary income recognized by the participant upon the
exercise of a non-qualified stock option, provided Hudson River meets its
federal tax reporting obligations. Upon sale of the shares acquired upon
exercise of a non-qualified stock option, any appreciation or depreciation
in the value of such shares from the time of exercise will result in the
recognition of a capital gain or loss by the participant. Such gain or loss
will be short- or long-term capital gain or loss depending upon how long
the participant held the shares following exercise of the non-qualified
stock option.
(6) The exercise of an SAR will result in the recognition of ordinary income by
the participant on the date of exercise in an amount of cash, and/or the
fair market value on that date of the shares, acquired pursuant to the
exercise. Hudson River will be entitled to a corresponding deduction
provided that it meets its federal tax reporting obligations.
Description of the 1998 Recognition and Retention Plan
This summary of the 1998 Recognition and Retention Plan may not contain all the
information that is important to you. You should read the full text of the plan
which is attached as Appendix H. This summary is qualified in its entirety by
reference to the plan.
Principal Features of the RRP. The RRP provides for the award of shares of
common stock, at no cost to the recipient, subject to the restrictions described
below. Each award under the RRP is made on such terms and conditions, consistent
with the terms of the RRP and applicable New York State Banking Board and FDIC
regulations, as the Compensation Committee shall determine.
The RRP is administered by Hudson River's Compensation Committee. The
Compensation Committee will select the recipients and terms of awards pursuant
to the RRP. In determining to whom and in what amount to grant
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<PAGE>
awards, the Compensation Committee considers the position and responsibilities
of eligible individuals, the value of their services to Hudson River and the
bank and other factors it deems relevant. Pursuant to the terms of the RRP, any
director, officer or employee of Hudson River or its affiliates may be selected
by the Compensation Committee to participate in the RRP. As of the date hereof,
there are approximately 338 persons eligible to participate in the RRP.
The RRP provides that shares used to fund awards under the RRP may be either
authorized but unissued shares or reacquired shares held by Hudson River in its
treasury. Any RRP shares which are forfeited will again be available for
issuance under the RRP.
Holders of RRP shares may not sell, assign, transfer, pledge, vote or otherwise
encumber any of those shares during the restricted period. All shares subject to
restriction will be voted by a designated trustee. All dividends paid on RRP
shares still subject to restrictions will be deferred and held for the account
of the participant thereof until the earlier of the lapse of the restrictions on
such shares or the death or disability of the participant.
Adjustments Upon Changes in Capitalization. Shares awarded under the RRP
will be adjusted by the Compensation Committee in the event of a reorganization,
recapitalization, stock split, stock dividend, combination or exchange of
shares, merger, consolidation or other change in corporate structure or the
common stock of Hudson River.
Federal Income Tax Consequences. Holders of restricted stock will recognize
ordinary income on the earlier of the date that the restricted stock is
transferable or is no longer subject to a substantial risk of forfeiture, in an
amount equal to the fair market value of the shares on that date. In certain
circumstances, a holder may elect to recognize ordinary income and determine
such fair market value on the date of the grant of the restricted stock. Holders
of restricted stock will also recognize ordinary income equal to their dividend
or dividend equivalent payments when such payments are received. Generally, the
amount of income recognized by participants will be a deductible expense for tax
purposes for Hudson River as long as Hudson River meets its federal tax
reporting obligations.
Amendment to the RRP. The board of Hudson River may amend, suspend or
terminate the RRP or any portion thereof at any time, subject to New York State
Banking Board and FDIC Regulations, provided, however, that no such amendment,
suspension or termination shall impair the rights of any participant, without
his consent, in any award theretofore made pursuant to the RRP.
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<PAGE>
THE SHAREHOLDER MEETINGS
Hudson River's board of directors is using this document to solicit proxies from
the holders of Hudson River common stock for use at the Hudson River annual
meeting. Cohoes' board of directors is using this document to solicit proxies
from the holders of Cohoes common stock for use at the Cohoes special meeting.
We are first mailing this document and accompanying form of proxy to Hudson
River and Cohoes shareholders on or about July __, 2000.
Times and Places of the Shareholder Meetings; Matters to be Considered at the
Shareholder Meetings
Time and Place of the Hudson River Time and Place of the Cohoes
Annual Meeting: Special Meeting:
August ____, 2000 August ___, 2000
3:00 p.m., local time ____:__ _.m., local time
The St. Charles Hotel and Restaurant Century House
16 Park Place 997 New Loudon Road
Hudson, New York Latham, New York
Matters to be Considered at the Hudson River Annual Meeting. At the Hudson River
annual meeting, Hudson River shareholders will be asked to consider and vote
upon:
o The adoption of the merger agreement and the approval of the issuance
of shares of Hudson River common stock in the merger.
o The approval of an amendment to the Hudson River 1998 Stock Option and
Incentive Plan and an amendment to the Hudson River 1998 Recognition
and Retention Plan.
o Election of three directors to the Hudson River board.
o Ratification of KPMG LLP as auditors of Hudson River for the fiscal
year ending March 31, 2001.
The first two proposals are more fully discussed under the headings "The Merger"
on page ____ and "Amendments to the Hudson River 1998 Stock Option and Incentive
Plan and the Hudson River 1998 Recognition and Retention Plan" on page ____. The
last two proposals are more fully discussed under the heading "Additional
Information Regarding the Hudson River Annual Meeting" on page ___.
Hudson River shareholders also may consider and vote upon any other matters that
may properly come before the Hudson River annual meeting, including approval of
any adjournment of the annual meeting. As of the date of this document, the
Hudson River board of directors is not aware of any other business to be
presented for consideration at the meeting.
Matters to be Considered at the Cohoes Special Meeting. At the Cohoes special
meeting, Cohoes shareholders will be asked to consider and vote upon the
adoption of the merger agreement. Cohoes shareholders also may consider and vote
upon any other matters that may properly come before the meeting, including
approval of any adjournment of the meeting. As of the date of this document, the
Cohoes board of directors is not aware of any other business to be presented for
consideration at the meeting.
Voting Rights of Shareholders; Votes Required for Approval
Voting Rights of Hudson River Shareholders. The Hudson River board of directors
has fixed the close of business on June 20, 2000 as the record date for
shareholders entitled to vote at the Hudson River meeting. Only holders of
record of Hudson River common stock on that record date are entitled to vote at
the meeting. Each share of Hudson
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<PAGE>
River common stock you own entitles you to one vote. On the Hudson River record
date, ___________ shares of Hudson River common stock were outstanding and
entitled to vote at the Hudson River annual meeting, held by approximately
________ shareholders of record.
Each participant in the Hudson River Employee Stock Ownership Plan instructs the
trustee how to vote his or her allocated shares. The trustee votes unallocated
shares in the manner directed by the majority of the allocated shares for which
it received instructions. If a participant does not give timely instructions,
the trustee votes the allocated shares in its discretion. Unvested shares under
Hudson River's 1998 Recognition and Retention Plan are voted by the trust
department of Hudson River's subsidiary bank.
Vote Required for Adoption of the Merger Agreement. The affirmative vote of the
holders of a majority of the Hudson River common stock is required to adopt the
merger agreement and approve the issuance of Hudson River common stock in the
merger. The Hudson River board unanimously recommends that Hudson River
shareholders vote "FOR" adoption of the merger agreement and approval of the
issuance of shares in the merger.
Because adoption of the merger agreement requires the affirmative vote of a
majority of the Hudson River common stock outstanding, abstentions and failure
to vote will have the same effect as votes against the merger. Under the Nasdaq
Stock Market rules, your broker may not vote your shares on the merger without
instructions from you. Without your voting instructions, a broker non-vote will
occur and will have the same effect as a vote against the merger.
The affirmative vote of the holders of a majority of the shares of Hudson River
common stock present and voting on the matter may approve all other proposals to
be considered at the Hudson River meeting except the election of directors,
which is done by a plurality of the votes cast. See "Additional Information
Regarding the Hudson River Annual Meeting" on page ____. A majority of shares
present may also authorize the adjournment of the Hudson River annual meeting.
No proxy that is voted against the merger will be voted in favor of adjournment
to solicit further proxies in favor of the merger.
Voting Rights of Cohoes Shareholders. The Cohoes board of directors has fixed
the close of business on June 22, 2000 as the record date for shareholders
entitled to notice of and to vote at the Cohoes special meeting. Only holders of
record of Cohoes common stock on the record date are entitled to vote at the
Cohoes special meeting. Each share of Cohoes common stock you own entitles you
to one vote. On the Cohoes record date, there were 7,912,255 shares of Cohoes
common stock outstanding and entitled to vote at the Cohoes special meeting,
held by approximately 4,600 shareholders of record.
Each participant in the Cohoes Employee Stock Ownership Plan instructs the
trustee how to vote his or her allocated shares. The trustee votes unallocated
shares in proportion to the votes of the allocated shares for which it received
instructions. If a participant does not give timely instructions, the trustee
votes the allocated shares in its discretion. Unvested shares under Cohoes' 1999
Recognition and Retention Plan are voted by Cohoes' board of directors.
Vote Required for Adoption of the Merger Agreement. The affirmative vote of the
holders of a majority of the Cohoes common stock outstanding is required to
adopt the merger agreement. The Cohoes board unanimously recommends that Cohoes
shareholders vote "FOR" adoption of the merger agreement.
Because approval of the Cohoes proposal to adopt the merger agreement requires
the affirmative vote of the holders of a majority of the Cohoes common stock
outstanding, abstentions and failures to vote will have the same effect as votes
against the merger. Under the Nasdaq Stock Market rules, your broker may not
vote your shares on the merger without instructions from you. Without your
voting instructions, a broker non-vote will occur and will have the same effect
as a vote against the merger.
The presence, in person or by proxy, of at least one-third of the total number
of shares of Cohoes common stock entitled to vote is required to constitute a
quorum at the special meeting. The affirmative vote of the holders of a majority
of the shares of Cohoes common stock present and voting on the matter may
authorize the adjournment of the meeting. No proxy that is voted against the
merger will be voted in favor of adjournment to solicit further proxies in favor
of the merger.
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Voting of Proxies; Revocability of Proxies; Proxy Solicitation Costs
Voting of Proxies. You may vote in person at your meeting or by proxy. To ensure
your representation at the meeting, we recommend you vote by proxy even if you
plan to attend your meeting. You can always change your vote at the meeting.
Remember, if your shares are held in the name of a broker or other nominee, only
your broker or such nominee can vote your shares and only after receiving
instructions from you on how to vote the shares. Please contact the person
responsible for your account and instruct him or her to execute a proxy card on
your behalf.
Voting instructions are included on your proxy card. If you properly give your
proxy and submit it to us in time to vote, the persons named as your proxy will
vote your shares as you have directed. You may vote for or against the
proposal(s) set forth on your proxy card and described in this document or
abstain from voting. If you submit your proxy but do not make a specific choice
as to how to vote, your proxy will follow the Hudson River board's or Cohoes
board's recommendation and vote your shares "FOR" the proposal(s).
If any other matters are properly presented for consideration at the Hudson
River annual meeting or Cohoes special meeting, the persons named in the
relevant form of proxy will have the discretion to vote on those matters in
accordance with their best judgment. Neither Hudson River nor Cohoes is aware of
any other matters to be presented at its respective shareholders' meeting other
than those described in its notice of meeting.
You may receive more than one proxy card depending on how your shares are held.
For example, you may hold some of your shares individually, some jointly with
your spouse and some in trust for your children -- in which case you will
receive three separate proxy cards to vote.
Revocability of Proxies. You may revoke your proxy before it is voted by:
o submitting a new proxy with a later date,
o notifying your company's secretary in writing before the meeting that
you have revoked your proxy, or
o voting in person at your meeting.
If you plan to attend your company's meeting and wish to vote in person, we will
give you a ballot at the meeting. However, if your shares are held in the name
of your broker, bank or other nominee, you must bring a legal proxy from the
nominee, indicating that you were the beneficial owner of common stock on the
appropriate record date and giving you the right to vote those.
Proxy Solicitation Costs. We each will pay our own costs of soliciting proxies.
In addition to this mailing, Hudson River and Cohoes directors, officers and
employees may also solicit proxies personally, electronically or by telephone.
Hudson River is paying Regan & Associates a fee of $6,000 plus expenses to help
with the solicitation. Cohoes is paying Regan & Associates a fee of $7,000
including expenses to help with the solicitation. We will also reimburse brokers
and other nominees for their expenses in sending these materials to you and
obtaining your voting instructions.
Do not send in any stock certificates with your proxy cards. As soon as
practicable after the completion of the merger, the exchange agent will mail
transmittal forms with instructions for the surrender of stock certificates for
Cohoes common stock to former Cohoes shareholders.
ADDITIONAL INFORMATION REGARDING THE HUDSON RIVER ANNUAL MEETING
In addition to the adoption of the merger agreement, Hudson River shareholders
are being asked to vote on the amendment of two benefit plans, the election of
three directors, and the ratification of auditors.
Vote Required for Approval of Proposals Other than the Merger. The
presence, in person or by proxy, of at least one-third of the total number of
shares of common stock entitled to vote is required to constitute a
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quorum at the meeting. Directors shall be elected by a plurality of the votes
cast. Approval of the amendment of the benefit plans and ratification of the
appointment of KPMG LLP requires the affirmative vote of the holders of a
majority of the votes cast. Abstentions and broker non-votes are counted for
purposes of determining a quorum at the meeting; however, abstaining shares will
have the same effect as a vote against the approval of the amendment of the
benefit plans and ratification of the auditor proposal while non-voted shares
will have no effect on the amendment of the benefit plans and ratification of
the auditor proposal. Abstentions and non-voted shares will have no effect on
the election of directors.
Voting Securities and Certain Holders Thereof. The following table sets
forth information, as of June 20, 2000, regarding share ownership of (1) those
persons or entities known by management to beneficially own more than five
percent of the common stock, (2) each officer of Hudson River and its subsidiary
bank who made in excess of $100,000 (salary and bonus) during the 2000 fiscal
year; and (3) all directors and executive officers of Hudson River and of its
subsidiary bank as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned Percent
Beneficial Owner at June 20, 2000 of Class
--------------------------------------------------------------------- -------------------------- --------
<S> <C> <C>
Five Percent Beneficial Owners
Hudson River Bank & Trust Company Employee Stock Ownership Plan(1) 1,428,300 9.2%
One Hudson City Centre
Hudson, New York 12534
Named Officers(2)
Carl A. Florio, Director, President and Chief Executive Officer 154,913(3) 1.0%
Sidney D. Richter, Senior Vice President 84,393(4) *
Timothy E. Blow, Chief Financial Officer 45,553 *
All Directors and Executive Officers as a Group (13 persons) (2) 644,032 4.16%
---------------
<FN>
* Less than 1%.
(1) The amount reported represents shares held by the Hudson River Bank & Trust
Company Employee Stock Ownership Plan (ESOP), 220,561 of which were
allocated to accounts of participants. First Bankers Trust Co., N.A.,
Quincy, Illinois, the trustee of the ESOP, may be deemed to beneficially
own the shares held by the ESOP which have not been allocated to the
accounts of participants. Unallocated shares will be voted by the trustee
in the manner directed by the majority of the allocated shares for which it
received instructions.
(2) Amounts include shares held directly, as well as shares allocated to ESOP
accounts or group members, shares held jointly with family members, shares
held in retirement accounts or shares held in a fiduciary capacity or by
certain family members and shares subject to options exercisable within 60
days.
(3) Includes 1,000 shares owned by Mr. Florio's parents, as to which he
disclaims beneficial ownership.
(4) Includes 520 shares owned by Mr. Richter's children, as to which he
disclaims beneficial ownership.
</FN>
</TABLE>
Election of Directors
Hudson River's board currently consists of nine members. The board is divided
into three classes, each of which contains one-third of the board. One-third of
the directors are elected annually. Directors of Hudson River are generally
elected to serve for a three-year period or until their respective successors
are elected and qualified.
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The table below sets forth certain information, regarding the composition of
Hudson River's board, including their terms of office. It is intended that the
proxies solicited on behalf of the board (other than proxies in which the vote
is withheld as to any nominee) will be voted at the annual meeting FOR the
election of the nominees identified below. If any nominee is unable to serve,
the shares represented by all valid proxies will be voted for the election of
such substitute as the board may recommend. At this time, the board knows of no
reason why any nominee might be unable to serve, if elected. There are no
arrangements or understandings between the nominees and any other person
pursuant to which the nominees were selected other than the agreement to
nominate Mr. Giaquinto pursuant to the merger agreement between Hudson River and
SFS Bancorp, Inc. Assuming completion of the merger, the combined company's
board of directors will be made up of six directors named by Hudson River's
board and six directors named by Cohoes' board. Two directors from each party
will be assigned to each class.
Shares of
Common Stock Percent
Position(s) Held Director Term Beneficially of
Name With Hudson River Age(1) Since Expires Owned(2) Class
--------------------------------------------------------------------------------
NOMINEES
Marilyn A. Herrington Director 56 2003 55,843 *
Joseph H. Giaquinto Director 60 2003 14,699 *
Stanley Bardwell, M.D. Director 75 2003 35,117 *
DIRECTORS CONTINUING IN OFFICE
Marcia M. Race Director 55 2001 11,543 *
William H. Jones Director 57 2001 32,471(3) *
Joseph W. Phelan Director 57 2001 36,043 *
Earl Schram, Jr. Chairman of the 77 2002 140,669(4) *
Board
Carl A. Florio Director, 51 2002 154,913(5) 1.0
President and
Chief Executive
Officer
William E. Collins Director 74 2002 29,274 *
* Less than 1%.
(1) At March 31, 2000.
(2) See footnote 2 on the preceding page.
(3) Includes 660 shares owned by Mr. Jones' children and 2,335 shares owned by
Mr. Jones' spouse's IRA. Mr. Jones disclaims beneficial ownership with
respect to those shares.
(4) Includes 9,600 shares owned by Mr. Schram's grandchildren, as to which he
disclaims beneficial ownership.
(5) Includes 1,000 shares owned by Mr. Florio's parents, as to which he
disclaims beneficial ownership.
The business experience of each director is set forth below. All directors
have held their present positions for at least the past five years, except as
otherwise indicated.
Marilyn A. Herrington. Ms. Herrington is involved in real estate
investments and development. Ms. Herrington serves on the Executive Committee
and Compensation Committee. Ms. Herrington also serves as a director of Hudson
River Bank & Trust Company Foundation.
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Joseph H. Giaquinto. Mr. Giaquinto served as President, CEO and Chairman of
the Board of Schenectady Federal Savings Bank and its holding company, SFS
Bancorp, Inc. from January 1984 until SFS merged with Hudson River in September,
1999. Mr. Giaquinto serves on the Audit Committee.
Stanley Bardwell, M.D. Dr. Bardwell is a retired physician in Craryville,
New York. From 1958 until 1988, Dr. Bardwell specialized in internal medicine
and cardiology. He has served as Chief of Medicine in Columbia Memorial Hospital
and Greene County Hospital, served on the Board of Health and was President of
the Potts Memorial Foundation as well as other various charitable groups. Dr.
Bardwell serves on the Executive Committee and Audit Committee. Dr. Bardwell
also serves as a director of Hudson River Bank & Trust Company Foundation.
Marcia M. Race. Ms. Race was employed by the bank from 1962 until her
retirement in 1997. Ms. Race served as Assistant Secretary of the bank from 1972
to 1978, Corporate Secretary from 1978 to 1989 and Assistant to the President
from 1989 to 1997. She is also Trustee of the Nativity/St. Mary's Parish
Community Church. Ms. Race serves on the Executive Committee.
William H. (Tony) Jones. Since 1986, Mr. Jones has owned and served as
President and Publisher of Roe Jan Independent Publishing Co., Inc., Hillsdale,
New York, a publisher of community newspapers and similar publications. Mr.
Jones serves on the Executive Committee and Audit Committee and as a director of
Hudson City Associates, Inc. Mr. Jones also serves as a director of Hudson River
Bank & Trust Company Foundation.
Joseph W. Phelan. Since 1983, Mr. Phelan has served as President of Taconic
Farms, Inc., Germantown, New York, a provider of laboratory animals for
research. He is also Treasurer of the Reformed Church in Germantown, New York.
Mr. Phelan serves on the Executive Committee, Trust Committee and Compensation
Committee.
Earl Schram, Jr. Mr. Schram is currently Chairman of the Board of Hudson
River and of its subsidiary bank, a position he has held since 1998. Mr. Schram
is an attorney and President of the law firm of Connor, Curran & Schram, P.C. in
Hudson, New York. He is also Vice President and Director of Taconic Farms, Inc.
Mr. Schram serves on the Executive Committee and Trust Committee. Mr. Schram
also serves as a Director of Hudson River Bank & Trust Company Foundation.
Carl A. Florio. Mr. Florio has served as President and Chief Executive
Officer of Hudson River since its incorporation and of the bank since 1996. From
1993 until his appointment as President and Chief Executive Officer, Mr. Florio
served as Chief Financial Officer of the bank. Prior to his becoming the bank's
Chief Financial Officer, Mr. Florio was a partner in the accounting firm of
Pattison, Koskey, Rath & Florio. Mr. Florio serves on the Executive Committee,
Trust Committee and as a director of Hudson City Associates, Inc., a wholly
owned subsidiary of the bank.
William E. Collins. Mr. Collins served as President and Chief Executive
Officer of the bank from 1983 until his retirement in 1990. Prior to becoming
President and Chief Executive Officer, Mr. Collins served as Executive Vice
President of the bank from March 1982 to December 1982. From 1991 to 1996, Mr.
Collins served as a director of Hudson City Associates, Inc. bank and general
partner of Premium Payment Plan. Mr. Collins serves on the Executive Committee
and the Audit Committee.
Meetings and Compensation of the Board of Directors and Committees.
Meetings of Hudson River's board are generally held on a quarterly basis. The
board met 11 times during the fiscal year ended March 31, 2000. During fiscal
2000, no incumbent director of Hudson River attended fewer than 75% of the
aggregate of the total number of Board meetings and the total number of meetings
held by the committees of the board on which he or she served. Directors of
Hudson River are not paid a fee for serving on the Hudson River Board. The board
of Hudson River has established Executive, Audit and Compensation Committees.
Hudson River's Executive Committee exercises the powers of the full board
between board meetings, except that this Committee does not have the authority
to amend the charter or bylaws, adopt a plan of merger, consolidation,
dissolution, or provide for the disposition of all or substantially all of the
property and assets of Hudson River. The Executive Committee is composed of the
full board. The Executive Committee did not meet during the year ended March 31,
2000.
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The Audit Committee is responsible for selecting Hudson River's independent
accountants and meeting with the independent accountants and internal auditors
to outline the scope and review the results of the annual audit. The current
members of this Committee are Directors Bardwell, Collins, Jones and Herrington.
This Committee met four times during the year ended March 31, 2000.
The Compensation Committee recommends employee compensation, benefits and
personnel policies to the board, as well as salaries and cash bonus plan
distributions concerning executive officers of Hudson River and the bank. The
current members of this Committee are Directors Phelan and Herrington. This
Committee met one time during the year ended March 31, 2000.
The full board of Hudson River acts as a Nominating Committee for the annual
selection of its nominees for election as directors. Pursuant to Hudson River's
Bylaws, nominations for directors by shareholders must be made in writing and
delivered to the Corporate Secretary of Hudson River at least 90 days prior to
the meeting and such written nomination must contain certain information as
provided in Hudson River's Bylaws. While the board will consider nominees
recommended by shareholders, it has not actively solicited nominations. This
Committee met one time during the year ended March 31, 2000.
Hudson River Bank & Trust Company. The bank's board meets monthly and may have
additional special meetings. The board met 12 times during the year ended March
31, 2000. The bank's executive committee, which exercises the powers of the full
board between board meetings and is comprised of the full board of the bank,
also met 12 times during the year ended March 31, 2000. During fiscal 2000, no
incumbent director of the bank attended fewer than 75% of the aggregate of the
total number of board meetings and the total number of meetings held by the
committees of the board on which he or she served.
Non-employee directors of the bank are paid a fee of $1,500 per meeting for
serving on the board. During fiscal 2000, members of the Executive Committee
each received $750 per committee meeting attended, members of the Audit
Committee received $600 per committee meeting attended, and members of the
Compensation and Trust Committees each received $300 per committee meeting
attended.
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<PAGE>
Executive Compensation
The following table sets forth information concerning the
compensation paid or granted to the named officers in fiscal 2000, 1999 and 1998
whose salary and bonus exceeded $100,000. No other executive officers had
compensation (salary and bonus) in excess of $100,000 in fiscal 2000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------------------------------------------------------------
Long Term
Annual Compensation Compensation Awards
------------------------------------------------------------------------------- ---------------------------------
Restricted All Other
Name and Principal Stock Options Compensation(2)
Position Year Salary ($) Bonus ($) Award(s)(1)($) (#) ($)
------------------------------------ ---------- ------------- -------------- ---------------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Carl A. Florio, President and 2000 $244,538 --- $ --- --- $ 29,897
Chief Executive Officer
1999 236,763 --- 2,053,187 312,441 30,851
1998 208,750 10,000 N/A N/A 6,319
Sidney D. Richter 2000 124,850 --- --- --- 26,420
Senior Vice President
1999 120,900 300 985,527 149,972 22,351
1998 120,000 700 N/A N/A 4,763
Timothy E. Blow 2000 98,838 7,000 --- --- 22,270
Chief Financial Officer
1999 95,713 5,300 985,527 149,972 20,212
1998 90,000 --- N/A N/A 270
==================================== ========== ============= ============== ====================== ========== ================
<FN>
(1) Represents the dollar value of the award of restricted stock based upon the
$11.50 closing price on January 5, 1999, the date of grant. The shares of
restricted stock vest in ten equal installments beginning one year from the
date of grant, provided that the grantee maintains continuous service with
Hudson River. Dividends are paid on the restricted shares to the extent and
on the same date as dividends that are paid on all other outstanding shares
of common stock.
(2) Includes life insurance premiums of $270, $270 and $270, ESOP allocations
of $27,040, $21,890 and $18,510 and 401(k) plan contributions of $2,587,
$4,260 and $3,490 on behalf of Messrs. Florio, Richter and Blow,
respectively, for fiscal 2000.
</FN>
</TABLE>
No stock options or stock appreciation rights were granted to Messrs.
Florio, Richter or Blow in fiscal 2000.
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<PAGE>
The following table sets forth certain information concerning the number
and value of unexercised stock options held by Messrs. Florio, Richter and Blow
at March 31, 2000.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
----------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Value Options at FY-End (#) at FY-End ($)(1)
on Realized -------------------------- --------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
-------------------- ------------ ---------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Carl A. Florio --- --- 62,488 249,953 --- ---
Sidney D. Richter --- --- 29,994 119,978 --- ---
Timothy E. Blow --- --- 29,994 119,978 --- ---
<FN>
--------------
(1) None of the options granted to Messrs. Florio, Richter and Blow are
in-the-money options based upon the fair market value of the underlying
shares at June 20, 2000.
</FN>
</TABLE>
Employment Agreements. The bank entered into employment agreements with Mr.
Florio and four other officers of the bank and Hudson River entered into
employment agreements with Carl Florio, Sidney Richter and Timothy Blow. The
employment agreements ensure that the bank and Hudson River are able to maintain
a stable and competent management base. The continued success of the bank and
Hudson River depends to a significant degree upon the skills and competence of
the above referenced officers.
The employment agreements provide for either three-year or two-year terms for
each executive. The terms of the employment agreements are extended on a daily
basis unless written notice of non-renewal is given by the board. The employment
agreements provide that the executive's base salary is reviewed annually. In
addition to the base salary, the employment agreements provide for, among other
things, participation in stock benefit plans and other fringe benefits
applicable to executive personnel. The agreements provide for termination by the
bank or Hudson River for cause at any time. In the event the bank or Hudson
River chooses to terminate the executive's employment for reasons other than for
cause, or in the event of the executive's resignation from the bank and Hudson
River upon: (i) failure to re-elect the executive to his current offices; (ii) a
material change in the executive's functions, duties or responsibilities; (iii)
a reduction in the benefits and perquisites being provided to the executive
under the employment agreement; (iv) a liquidation or dissolution of the bank or
Hudson River; or (v) a breach of the agreement by the bank or Hudson River, the
executive or, in the event of death, his beneficiary would be entitled to
receive an amount equal to the remaining base salary payments due to the
executive for the remaining term of the employment agreement and the
contributions that would have been made on the executive's behalf to any
employee benefit plans of the bank and Hudson River during the remaining term of
the agreement. The bank and Hudson River would also continue and pay for the
executive's life, health, dental and disability coverage for the remaining term
of the agreement. Upon any termination of the executive, other than following a
change in control, the executive is subject to a one year non-competition
agreement.
Under the employment agreements, if voluntary or involuntary termination follows
a change in control of the bank or Hudson River, the executive or, in the event
of the executive's death, his beneficiary, would be entitled to the payment of
base salary, plan contributions and other forms of compensation to which the
executive would be entitled for the remaining term of the employment agreement
plus a severance payment equal to the greater of: (i) the payments due for the
remaining terms of the agreement; or (ii) three times the average of the five
preceding taxable years' annual compensation for Mr. Florio, and two times the
average of the five preceding taxable years' annual compensation for the four
other individuals. The bank and Hudson River would also continue the executive's
life, health, and disability coverage for thirty-six months for Messrs. Florio,
Richter and Blow, and twenty-four months for the other two individuals. Under
the employment agreements, a voluntary termination following a change in control
means the executive's voluntary resignation following any demotion, loss of
title, office authority or responsibility, a reduction in compensation or
benefits, or relocation. Notwithstanding that both
50
<PAGE>
the bank and Hudson River employment agreements provide for a severance payment
in the event of a change in control, the executive would only be entitled to
receive a severance payment under one agreement.
Payments to the executive under the bank's employment agreement are guaranteed
by Hudson River in the event that payments or benefits are not paid by the bank.
Payment under Hudson River's employment agreement would be made by Hudson River.
Hudson River's employment agreement also provides that Hudson River compensates
the executive for excise taxes imposed on any "excess parachute payments," as
defined under section 280G of the Internal Revenue Code and any additional
income and excise taxes imposed as a result of such compensation. All reasonable
costs and legal fees paid or incurred by the executive pursuant to any dispute
or question of interpretation relating to the employment agreements shall be
paid by the bank or Hudson River, respectively, if the executive is successful
on the merits pursuant to a legal judgment, arbitration or settlement. The
employment agreements also provide that the bank and Hudson River shall
indemnify the executive to the fullest extent allowable under New York and
Delaware law, respectively. In the event of a change in control of the bank or
Hudson River, the total amount of payments due under the employment agreements,
based solely on cash compensation over the past five fiscal years paid to the
officers who received employment agreements and excluding any benefits under any
employee benefit plan or reimbursement for taxes which may be payable, would be
approximately $1.2 million.
Change in Control Agreements. The bank entered into two-year Change in
Control (CIC) Agreements with eight officers of the bank, none of whom are
covered by employment agreements. Commencing on the first anniversary date and
continuing on each anniversary thereafter, the bank CIC Agreements may be
renewed by the board of the bank for an additional year. The bank's CIC
Agreements provide that in the event voluntary or involuntary termination
follows a change in control of Hudson River or the bank, the officer would be
entitled to receive a severance payment equal to two times the officer's average
base amount of cash compensation for the five most recent taxable years. The
bank would also continue to pay for the officer's life, health and disability
coverage for twenty-four months following termination. Under the CIC Agreements,
a voluntary termination following a change in control means the executive's
voluntary resignation following any demotion, loss of title, office authority or
responsibility, a reduction in compensation or benefits, or relocation. In the
event of a change in control of Hudson River or the bank, the total payments
that would be due under the CIC Agreements, based solely on the five year
average base amount of cash compensation paid to the officers covered by the CIC
Agreements and excluding any benefits under any employee benefit plan which may
be payable, would be approximately $1.0 million.
Employee Severance Compensation Plan. The bank's board established the
Hudson River Bank & Trust Company Employee Severance Compensation Plan which
provides designated employees with severance pay benefits in the event of a
change in control of the bank or Hudson River. Management personnel with
employment agreements or CIC Agreements are not eligible to participate in the
severance plan. Generally, designated employees are eligible to participate in
the severance plan if they have completed at least one year of service with the
bank. The severance plan vests in each participant a contractual right to the
benefits such participant is entitled to thereunder. Under the severance plan,
in the event of a change in control of the bank or Hudson River, eligible
employees who are terminated from or terminate their employment within one year
(for reasons specified under the severance plan), are entitled to receive a
severance payment. If the participant, whose employment has terminated, has
completed at least one year of service, the participant is entitled to a cash
severance payment equal to the last two weeks of annual compensation immediately
preceding a change-in-control for each year of service up to a maximum of 100%
of annual compensation. Such payments may tend to discourage takeover attempts
by increasing costs to be incurred by the bank in the event of a takeover. In
the event the provisions of the Severance Plan are triggered, the total amount
of payments that would be due thereunder, based solely upon current salary
levels, would be approximately $276,000. However, it is management's belief that
certain of the bank's employees would be retained in their current positions in
the event of a change in control, and that any amount payable under the
severance plan would be considerably less than the total amount that could
possibly be paid under the severance plan.
Benefit Plans. The bank currently provides health care benefits to its
employees, including hospitalization, major medical, dental, life and disability
insurance, subject to certain deductibles and copayments by employees.
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<PAGE>
Defined Benefit Pension Plan. The bank sponsors a defined benefit pension
plan for its employees. Salaried employees are eligible to participate in the
pension plan following the completion of one year of service (1,000 hours worked
during a continuous 12-month period) and attainment of 21 years of age. A
participant must reach five years of service before attaining a vested interest
in his or her retirement benefits, after which such participant is 100% vested.
The pension plan is funded solely through contributions made by the bank.
The benefit provided to a participant at normal retirement age (generally age
65) is based on the average of the participant's basic annual compensation
during the 36 consecutive months of service within the last 120 completed months
of a participant's service which yields the highest average compensation.
Compensation for this purpose is the participant's basic annual salary,
including any contributions through a salary reduction arrangement to a cash or
deferred plan, but exclusive of overtime, bonuses, severance pay, or any special
payments or other deferred compensation arrangements. The annual benefit
provided to a participant, without offset for the participant's anticipated
Social Security benefit, who retires at age 65 is equal to 2% of the executive's
highest average compensation for each year of service up to a maximum of 30
years.
The annual benefit provided to participants (i) at early retirement age
(generally age 62) with five years of service who elect to defer the payment of
their benefits to normal retirement age, (ii) at early retirement age with five
years of service who elect to receive payment of their benefits prior to normal
retirement age, or (iii) who postpone annual benefits beyond normal retirement
age, are calculated basically the same as the benefits for normal retirement
age, with the executive's highest average compensation being multiplied by 2%
for each year of such individual's actual years of service. A participant
eligible for early retirement benefits who does not meet the requirements set
forth above will have his or her benefits adjusted as further described in the
pension plan. The pension plan also provides for disability and death benefits.
The following table sets forth, as of March 31, 2000, estimated annual pension
benefits for individuals at age 65 payable in the form of a life annuity under
the most advantageous plan provisions for various levels of compensation and
years of service. The amounts in this table are based upon the assumption that
the Pension Plan continues in its present form and do not reflect offsets for
Social Security benefits and do not reflect benefits payable under the ESOP. At
March 31, 2000, the estimated years of credited service of Messrs. Florio,
Richter and Blow were seven, nine and three years, respectively.
Pension Plan Table
Years of Benefit Service
----------------------------------------------
Final Average 15 20 25 30 35*
Salary ------- ------- ------- ------- ------------------
$ 75,000 $22,500 $30,000 $37,500 $45,000 $ 46,875
$100,000 $30,000 $40,000 $50,000 $60,000 $ 62,500
$125,000 $37,500 $50,000 $62,500 $75,000 $ 78,125
$150,000 $45,000 $60,000 $75,000 $90,000 $ 93,750
$160,000 $48,000 $64,000 $80,000 $96,000 $100,000
--------------
* Assumes that the participant had 30 or more years of credited service as of
July 14, 1995.
For the 2000 plan year, the maximum compensation is limited to $160,000. The
maximum benefit payable under the qualified plan for the 2000 plan year is
$130,000.
Benefit Restoration Plan. Hudson River also maintains a non-qualified
deferred compensation plan, known as the Benefit Restoration Plan. The Benefit
Restoration Plan provides certain officers and highly compensated executives of
Hudson River and the bank with supplemental retirement income when such amounts
cannot be paid from the tax-qualified 401(k) Plan or ESOP. Participants in the
Benefit Restoration Plan receive a benefit equal to the amount they would have
received under the Pension Plan, the 401(k) Plan and the ESOP, but for
reductions in such benefits imposed by operation of Sections 401(a)(17), 401(m),
401(k)(3), 402(g) and 415 of the Code. In addition, the Benefit Restoration Plan
is intended to make up benefits lost under the ESOP allocation
52
<PAGE>
procedures to certain participants named by the Compensation Committee who
retire prior to the complete repayment of the ESOP loan. At the retirement of a
participant, the restored ESOP benefits under the Benefit Restoration Plan are
determined by first: (1) projecting the number of shares that would have been
allocated to the participant under the ESOP if they had been employed throughout
the period of the ESOP loan (measured from the participant's first date of ESOP
participation); and (2) first reducing the number determined by (1) above by the
number of shares actually allocated to the participant's account under the ESOP;
and second, by multiplying the number of shares that represent the difference
between such figures by the average fair market value of the common stock over
the preceding five years. Benefit Restoration Plan participant's benefits are
payable upon the retirement or other termination of service of the participant
in the form of a lump sum. Payment of a deceased participant's benefits will be
made to his or her designated beneficiary.
Stock Based Benefit Plans. Hudson River's 1998 Stock Option and Incentive
Plan and its 1998 Recognition and Retention Plan are discussed on pages __ and
__.
Compensation Committee Report on Executive Compensation. In fulfillment of
SEC requirements for disclosure in proxy materials of the Compensation
Committee's policies regarding compensation for executive officers, the
committee has prepared the following report for inclusion in this proxy
statement.
Decisions on compensation of Hudson River's executives are made by the
Compensation Committee of the board. Each member of the committee is a
non-employee director. The committee believes that the actions of each executive
officer have the potential to impact the short-term and long-term profitability
of Hudson River. Consequently, the committee places considerable importance on
its task of designing and administering an executive compensation program.
Compensation Policy. The Compensation Committee has developed an executive
compensation policy designed to (1) offer competitive compensation to attract,
motivate, retain and reward executive officers who are crucial to the long-term
success of Hudson River; and (2) encourage decision-making that maximizes
long-term shareholder value. The Compensation Committee has sought to consider a
multitude of factors establishing appropriate levels of compensation for
executive officers, with no one factor clearly overshadowing all the others.
The compensation package provided to the executive officers of Hudson River is
composed principally of base salary and cash and stock-based incentive awards.
Executive officers also participate in other benefit plans available to all
eligible employees, including the ESOP.
The Compensation Committee considers a variety of factors in determining
executive compensation. These factors generally fall into two categories, those
that relate to specific work performed and expected of the officer and those
that relate to Hudson River, the bank, the local business economic conditions
and other general matters. In the former category, the Committee considers,
among other factors, the level of responsibility of each officer; the expertise
and skill level required to perform the position; satisfaction of prior period
goals and objectives; length of service; the complexity of work that may be
required in connection with strategic plans or special projects; and prior
compensation history. In the latter category, the Committee considers, among
other factors, Hudson River's earnings, capital and asset size; the results of
government regulatory examinations; the bank's regulatory ratings on safety and
soundness as well as Community Reinvestment Act examinations; and performance
and compensation programs of peer group banks.
Employee benefit plans represent an important component of any compensation
package. The defined benefit pension plan and health insurance benefits
available to all employees, including executive officers, provide competitive
benefits comparable to those available at other institutions. Stock-based
compensation plans, including the ESOP, the 1998 Stock Option and Incentive Plan
and the 1998 Recognition and Retention Plan, provide employees, including
executive officers, with additional equity-based incentives to maximize
long-term shareholder value. Cash bonuses are used to provide incentives to both
executive officers and other employees in relation to specific projects or
additional responsibilities.
The Compensation Committee's decisions are discretionary and are based upon
subjective factors. No mathematical or similar objective formula is used to
determine any compensation package. The Compensation
53
<PAGE>
Committee believes that a competitive employee benefit package is essential to
achieving the goals of attracting and retaining highly qualified employees.
Chief Executive Officer. Total annual compensation paid to Carl A. Florio,
President and Chief Executive Officer, for fiscal 2000 was $244,538 as detailed
in the above compensation table and reflects a 3% increase from fiscal 1999. In
determining total compensation paid to the Chief Executive Officer, including
his benefits under the Benefit Restoration Plan, the Compensation Committee
considered the factors discussed above and also considered a number of specific
matters including stock-based compensation and benefit plans awarded or made
available to chief executive officers of other thrift institutions.
This report is included herein at the direction of the Compensation
Committee members.
Joseph W. Phelan
Marilyn A. Herrington
Compensation Committee Interlocks and Insider Participation. Sidney D.
Richter, Senior Vice President of Hudson River and the bank, also serves as a
director of Taconic Farms, Inc. Director Phelan, a member of the Compensation
Committee of Hudson River and the bank, also serves as the President of Taconic
Farms, Inc., and Director Schram, Chairman of the Board of Hudson River and the
bank, also serves as a Vice President and Director of Taconic Farms, Inc.
Comparative Stock Performance Presentation. Set forth below is a line graph
comparing the cumulative total return on Hudson River's common stock to the
cumulative total return of the Nasdaq Bank Index and the S&P 500 Index for each
quarterly period from July 1, 1998 (the date Hudson River's common stock was
first reported on the Nasdaq Stock Market) through March 31, 2000. The
presentation assumes $100 was invested on July 1, 1998 in Hudson River's common
stock at a price of $10.00 per share, the subscription offering price in Hudson
River's initial public offering.
54
<PAGE>
[Graphic Omitted]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
7/1/98 9/30/98 12/30/98 3/31/99 6/30/99 9/30/99 12/31/99 3/31/00
------- ------- -------- ------- ------- ------- -------- -------
- X - Hudson River.......$100.00 $101.25 $113.13 $109.38 $111.58 $111.24 $102.09 $101.12
- ^ - S&P 500 Index...... 100.00 90.05 109.23 114.67 122.75 115.08 132.20 135.23
- || - Nasdaq Bank Index.. 100.00 81.83 87.30 83.53 89.62 81.21 82.20 74.95
</TABLE>
Certain Transactions. The bank's policies do not permit the bank to make
loans to any of its directors. Federal laws require that all loans or extensions
of credit to executive officers and directors must be made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with the general public and must not involve
more than the normal risk of repayment or present other unfavorable features. As
of March 31, 2000, all outstanding loans to the bank's executive officers were
made in the ordinary course of business and on the same terms, including
collateral and interest rates, as those prevailing at the time for comparable
transactions with the general public, and do not involve more than the normal
risk of collectiblity.
The chairman of the board, Earl Schram, Jr., is president of the law firm of
Connor, Curran & Schram P.C. Connor Curran serves as outside counsel to the bank
and performs various legal services for the bank. During fiscal 2000, the bank
paid Connor Curran approximately $195,245 in fees for services rendered. Connor
Curran also receives an indirect benefit from the bank to the extent borrowers
of the bank engage Connor Curran to close their loans. Services provided by
Connor Curran to the bank are provided on terms comparable to those which are
available to unaffiliated parties.
55
<PAGE>
Ratification of the Appointment of Auditors
The board has renewed Hudson River's arrangement for KPMG LLP to be its
auditors for the 2001 fiscal year, subject to the ratification of the
appointment by Hudson River's shareholders. The board recommends that
shareholders vote "FOR" the ratification of the appointment of KPMG LLP as
Hudson River's auditors for the fiscal year ending March 31, 2001.
LEGAL MATTERS
The validity of the Hudson River common stock to be issued in connection with
the merger will be passed upon by Silver, Freedman & Taff, L.L.P., 1100 New York
Avenue, N.W., Suite 700, Washington, D.C. 20005. It is a condition to the
completion of the merger that Hudson River and Cohoes receive opinions from
Silver, Freedman & Taff, L.L.P. and Elias, Matz, Tiernan & Herrick, L.L.P.,
respectively, with respect to the tax consequences of the merger.
EXPERTS
The consolidated financial statements contained in Hudson River's Annual Report
on Form 10-K for the year ended March 31, 2000 have been audited by KPMG LLP and
are incorporated by reference into this document in reliance on that firm's
expertise in accounting and auditing.
The consolidated financial statements contained in Cohoes Annual Report on Form
10-K for the year ended June 30, 1999 have been audited by Arthur Andersen LLP,
independent public accountants, and are incorporated by reference into this
document in reliance upon the authority of said firm as experts in accounting
and auditing.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of KPMG LLP are expected to be present at the Hudson River
meeting, and representatives of Arthur Andersen LLP are expected to be present
at the Cohoes meeting. In each case, such representatives will have the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions.
FUTURE SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in the Hudson River's proxy materials for
next year's annual meeting of shareholders, any shareholder proposal must be
received at the Hudson River's executive office at One Hudson City Centre,
Hudson, New York 12534 no later than ________. Any such proposal shall be
subject to the requirements of the proxy rules adopted under the Securities
Exchange Act of 1934, as amended. Otherwise, any shareholder proposal to take
action at such meeting must be received at the Company's executive office by
_______; provided, however, that in the event that the date of the annual
meeting is held before __________, or after ________, the shareholder proposal
must be received not later than the close of business on the later of the 90th
day prior to such annual meeting or the tenth day following the day on which
notice of the date of the annual meeting was mailed or public announcement of
the date of such meeting was first made. All shareholder proposals must also
comply with the Company's bylaws and Delaware law.
If the merger takes place, Cohoes will have no more annual meetings. If the
merger does not take place, any Cohoes shareholder who wishes to submit a
shareholder proposal for possible inclusion in the proxy statement and proxy for
Cohoes' 2000 annual meeting of shareholders must have done so on or before May
27, 2000. No proposals were received by such date.
56
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Hudson River and Cohoes file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy such
information at the following public reference rooms of the SEC:
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from
commercial document retrieval services and at the world wide web site maintained
by the SEC at "http://www.sec.gov." You may also obtain copies of such
information by mail from the Public Reference Section of the SEC, at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
Hudson River filed with the SEC a registration statement on Form S-4 under the
Securities Act of 1933 to register the shares of Hudson River common stock to be
issued to Cohoes shareholders in the merger. This document is a part of that
registration statement and constitutes a prospectus of Hudson River in addition
to being a proxy statement of Hudson River and Cohoes for their shareholder
meetings. As permitted by SEC rules, this document does not contain all the
information contained in the registration statement or the exhibits to the
registration statement. Such additional information may be inspected and copied
as set forth above.
The SEC allows us to "incorporate by reference" information into this document,
which means that we can disclose important business and financial information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be part of this document,
except for any information superseded by information contained in this document
or in later filed documents incorporated by reference in this document. This
document incorporates by reference the documents set forth below that we have
previously filed with the SEC. These documents contain important information
about our companies and their finances.
All of the documents filed with the SEC by Hudson River (File No. 0-17901)
pursuant to the Securities Exchange Act of 1934 since the end of its fiscal year
ended March 31, 2000 are incorporated by reference in this document. These
documents consist of the following:
o Hudson River's Annual Report on Form 10-K for the year ended March 31,
2000.
o Hudson River's Current Report on Form 8-K filed May 5, 2000.
The description of Hudson River's capital stock is incorporated by reference
from Hudson River's Pre-Effective Amendment No. One to its Registration
Statement on Form S-1 (No. 333-47605) filed May 1, 1998.
All of the documents filed with the SEC by Cohoes (File No. 0-15580) pursuant to
the Securities Exchange Act of 1934 since the end of its fiscal year ended June
30, 1999 are incorporated by reference in this document. These documents consist
of the following:
o Cohoes' Annual Report on Form 10-K for the year ended June 30, 1999.
o Cohoes' Annual Meeting Proxy Statement on Schedule 14A filed September
24, 1999.
o Cohoes' Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1999, December 31, 1999 and March 31, 2000.
o Cohoes' Current Reports on Form 8-K filed July 22, 1999 and May 5,
2000.
We are also incorporating by reference additional documents that we file with
the SEC between the date of this document and the date of the shareholder
meetings. This incorporation by reference by us will not be deemed to
specifically incorporate by reference the information relating to board
compensation committee reports on executive compensation and performance graphs
(as permitted under Item 402(a)(8) of Regulation S-K).
57
<PAGE>
Hudson River supplied all information contained or incorporated by reference in
this document relating to Hudson River and Cohoes supplied all such information
relating to Cohoes.
If you are a shareholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the SEC.
Documents incorporated by reference are available from us without charge.
Exhibits will not be sent, however, unless those exhibits have specifically been
incorporated by reference in this document. Shareholders may obtain documents
incorporated by reference in this document by writing or telephoning the
appropriate party at the addresses and telephone numbers that follow:
Hudson River Documents Cohoes Documents
Hudson River Bancorp, Inc. Cohoes Bancorp, Inc.
One Hudson City Centre 75 Remsen Street
Hudson, New York 12534 Cohoes, New York 12047
(518) 828-4600 (518) 233-6500
If you would like to request documents from Hudson River or Cohoes, please do so
by _________, 2000 to receive them before the shareholder meetings.
You should rely only on the information contained or incorporated by reference
in this document. We have not authorized anyone to provide you with information
that is different from what is contained in this document. You should not assume
that the information contained in this document is accurate as of any date other
than the date of this document, and neither the mailing of this document to
shareholders nor the issuance of Hudson River common stock in the merger shall
create any implication to the contrary.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
between
COHOES BANCORP, INC.
and
HUDSON RIVER BANCORP, INC.
April 25, 2000
<PAGE>
TABLE OF CONTENTS
Page Number
ARTICLE I DEFINITIONS AND RULES OF INTERPRETATION
1.1 Definitions............................................................2
1.2 Rules of Interpretation...............................................10
ARTICLE II PLAN OF MERGER
2.1 The Merger............................................................10
2.2 Surviving Corporation.................................................11
2.3 Closing...............................................................13
2.4 Treatment of Capital Stock............................................13
2.5 Shareholder Rights; Stock Transfers...................................13
2.6 Fractional Shares.....................................................13
2.7 Options...............................................................14
2.8 Exchange Procedures...................................................15
2.9 Additional Actions....................................................16
ARTICLE III MUTUAL REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THE PARTIES
3.1 Capital Structure.....................................................16
3.2 Registrations.........................................................17
3.3 Subsidiaries..........................................................17
3.4 This Agreement........................................................18
3.5 Financial Statements; No Adverse Change...............................18
3.6 Fairness Opinion......................................................19
3.7 Interim Events........................................................19
ARTICLE IV MUTUAL REPRESENTATIONS AND WARRANTIES WITH RESPECT TO
THE PARTIES AND THEIR SUBSIDIARIES
4.1 Organization and Good Standing........................................19
4.2 Compliance with Law...................................................20
4.3 Regulatory Reports....................................................20
4.4 Governmental Approvals................................................20
4.5 No Violations.........................................................21
4.6 No Broker's or Finder's Fees..........................................21
4.7 Equity Holdings ......................................................21
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4.8 Litigation and Other Proceedings......................................21
4.9 Environmental Matters.................................................22
4.10 Tax Matters..........................................................22
4.11 Year 2000 Compliant..................................................24
4.12 Insurance............................................................24
4.13 Labor................................................................24
4.14 Indemnification......................................................24
4.15 Loan Portfolio.......................................................24
4.16 Investment Portfolio.................................................25
4.17 Defaults.............................................................25
4.18 Real Estate Loans and Investments....................................25
4.19 Derivatives Contracts................................................26
4.20 Employee Benefit Plans...............................................26
4.21 Properties...........................................................29
4.22 Certain Agreements...................................................30
4.23 Material Interests of Certain Persons................................31
4.24 No Impediments.......................................................31
4.25 Liquidation Account..................................................31
4.26 Disclosures..........................................................32
ARTICLE V ADDITIONAL REPRESENTATIONS AND
WARRANTIES OF COHOES
5.1 Registration Obligations..............................................32
ARTICLE VI COVENANTS
6.1 Reasonable Best Efforts...............................................32
6.2 Shareholders' Meetings................................................32
6.3 Regulatory Matters....................................................33
6.4 Investigation and Confidentiality.....................................34
6.5 Press Releases........................................................35
6.6 Business of the Parties...............................................35
6.7 Certain Actions.......................................................40
6.8 Current Information...................................................40
6.9 Indemnification.......................................................41
6.10 Environmental Reports................................................43
6.11 Employees and Employee Benefit Plans.................................43
6.12 Bank Merger and Resulting Institution................................47
6.13 Litigation Matters...................................................49
6.14 Conforming Entries...................................................49
6.15 INTENTIONALLY OMITTED............................................51
6.16 Disclosure Supplements...............................................51
6.17 Failure to Fulfill Conditions........................................51
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6.18 Proxy Solicitor......................................................51
6.19 Surviving Corporation Common Stock...................................51
6.20 Prospectus/Joint Proxy Statement.....................................52
6.21 Tax Opinion..........................................................52
6.22 Reservation of Shares to
Satisfy Cohoes Continuing Options................................52
6.23 Listing..............................................................53
6.24 New Affiliates.......................................................53
ARTICLE VII CONDITIONS PRECEDENT
7.1 Conditions Precedent - the Parties....................................53
7.2 Conditions Precedent - Cohoes.........................................55
7.3 Conditions Precedent - Hudson.........................................56
ARTICLE VIII TERMINATION, WAIVER, AMENDMENT
AND SPECIFIC PERFORMANCE
8.1 Termination...........................................................57
8.2 Effect of Termination.................................................58
8.3 Survival of Representations,
Warranties and Covenants..........................................59
8.4 Waiver................................................................59
8.5 Amendment or Supplement...............................................59
8.6 Specific Performance..................................................60
ARTICLE IX MISCELLANEOUS
9.1 Expenses..............................................................60
9.2 Entire Agreement......................................................60
9.3 No Assignment.........................................................61
9.4 Notices...............................................................61
9.5 Counterparts..........................................................62
9.6 Governing Law.........................................................62
9.7 Severability..........................................................62
9.8 Standard of Breach....................................................62
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Exhibit A - Cohoes Stock Option Agreement
Exhibit B - Hudson Stock Option Agreement
Exhibit C - Hudson Directors' Voting Agreement
Exhibit D - Cohoes Directors' Voting Agreement
Exhibit E - Cohoes Affiliates Agreement
Exhibit F - Robinson Employment Agreement
Exhibit G - Florio Employment Agreement
Exhibit H - Blow Employment Agreement
Exhibit I - Ahl Employment Agreement
Exhibit J - Richter Employment Agreement
Exhibit K - Amendments to Hudson's Charter
to be included in Certificate of Merger
Exhibit L - Proposed Amendments to Hudson's Bylaws
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is dated as of April 25, 2000, by and
between Cohoes and Hudson.
WHEREAS, Cohoes and Hudson desire to combine their respective holding
companies through a tax-free, stock-for-stock merger so that the respective
shareholders of Cohoes and Hudson will have an equity ownership in the combined
holding company;
WHEREAS, neither the Board of Cohoes nor the Board of Hudson seeks to
sell its respective holding company at this time but both Boards desire to merge
their respective holding companies in a transaction structured as a merger of
equals;
WHEREAS, it is intended that to accomplish this result, Cohoes will be
merged with and into Hudson, with Hudson being the Surviving Corporation;
WHEREAS, immediately following consummation of the Merger, it is
contemplated that Cohoes' savings bank Subsidiary will be merged with and into
Hudson's savings bank Subsidiary, with Hudson's savings bank Subsidiary as the
Resulting Institution;
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to the other Party's willingness to
enter into this Agreement, each of Hudson and Cohoes is granting the other an
option to acquire its Common Stock pursuant to stock option agreements in the
forms attached as Exhibits A and B hereto, respectively;
WHEREAS, it is intended that for federal income tax purposes the
Transactions shall qualify as reorganizations within the meaning of Section 368
of the Code and this Agreement shall constitute a plan of reorganization
pursuant to Section 368 of the Code;
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to the Parties' willingness to
enter into this Agreement, Cohoes and each of the directors of Hudson, and
Hudson and each of the directors of Cohoes, are entering into voting agreements
in the forms attached hereto as Exhibits C and D, respectively;
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WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to Hudson's willingness to enter
into this Agreement, each of the affiliates of Cohoes for purposes of Rule 145
of the Securities Act is entering into an affiliate agreement in the form
attached hereto as Exhibit E; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to the Parties' willingness to
enter into this Agreement certain executives of Cohoes and Hudson are entering
into employment agreements with Hudson and its savings bank subsidiary (which
shall become effective at the Effective Time) in the forms attached as Exhibits
F, G, H, I and J, respectively.
NOW, THEREFORE, in consideration of such inducements and of the mutual
promises and agreements contained herein, the Parties agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
The following meanings shall apply for purposes of this Agreement.
1.1 Definitions
"Agreement" means this Agreement and Plan of Merger.
"Alternative Proposal" means any bona fide written proposal, public
announcement or filing with the SEC or any other Government Entity by any person
other than a Party to engage in a merger, consolidation, purchase or lease of
substantially all assets, purchase of securities representing more than 20% of
the voting power, or any similar transaction, involving a Party or any of its
Subsidiaries.
"Bank Merger" means the contemplated merger of Cohoes' savings bank
Subsidiary into Hudson's savings bank Subsidiary.
"Board" means the Board of Directors of an entity, or any committee
duly authorized to act on behalf of the Board of Directors of such entity with
respect to the relevant matter.
"Cause" means termination because of the employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary
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duty involving personal profit, intentional failure to perform stated duties or
willful violation of any law, rule or regulation (other than traffic violations
or similar offenses).
"Certificate" means any certificate which prior to the Effective Time
represented shares of Cohoes Common Stock.
"Certificate of Merger" means the certificate of merger to be executed
and filed by the Parties with the Secretary of State of the State of Delaware
pursuant to the DGCL to make the Merger effective and which shall include
amendments in the Charter of the Surviving Corporation in substantially the form
of Exhibit K hereto to implement and carry out the provisions of Sections 2.2(a)
and (b) of this Agreement.
"Charter" means the primary organizational document of any entity,
whether designated as "Articles of Incorporation," "Certificate of
Incorporation" or otherwise.
"Claim" has the meaning attributed to it in Section 6.9.
"Closing" means the closing of the transactions contemplated
by this Agreement.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Cohoes" means Cohoes Bancorp, Inc., a Delaware corporation.
"Cohoes ESOP" means the employee stock ownership plan of Cohoes, as in
effect as of the date hereof.
"Cohoes Options" means options to purchase shares of Cohoes Common
Stock, but excludes the option being granted to Hudson pursuant to the stock
option agreement in the form attached as Exhibit B hereto.
"Cohoes-Owned Shares" means any shares of Cohoes' Common Stock which
are owned beneficially or of record by any Party or any Subsidiary of a Party,
other than shares held in a fiduciary capacity for the benefit of third parties
or as a result of debts previously contracted.
"Common Stock" means the common stock of any entity which has only one
authorized class of common stock.
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"CRA" means the Community Reinvestment Act.
"Delivered" means provided by a Party or any of its
Subsidiaries to the other Party.
"DGCL" means the Delaware General Corporation Law.
"Effective Time" means the time that the Merger becomes effective under
the DGCL.
"Employee Plans" means all stock option, restricted stock, employee
stock purchase and stock bonus plans, pension, profit-sharing and retirement
plans, deferred compensation, consultant, bonus and group insurance agreements
and all other incentive, health, welfare and benefit plans and arrangements
maintained for the benefit of any present or former directors or employees of a
Party or any of its Subsidiaries, whether written or oral.
"Encumbrance" means any lien, claim, charge, restriction, security
interest, rights of third parties, or encumbrance.
"Environmental Claim" means any written notice from any Governmental
Entity or third party alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or penalties)
arising out of, based on, or resulting from the presence, or release into the
environment, of any Materials of Environmental Concern.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any Governmental
Entity relating to (i) the protection, preservation or restoration of the
environment (including air, water vapor, surface water, groundwater, drinking
water supply, surface soil, subsurface soil, plant and animal life or any other
natural resource), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of Materials of Environmental Concern. The term Environmental Law
includes (x) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. ss.9601, et seq; the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. ss.6901, et seq; the Clean Air Act, as
amended, 42 U.S.C. ss.7401, et seq; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. ss.1251, et seq; the
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Toxic Substances Control Act, as amended, 15 U.S.C. ss.9601, et seq; the
Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.1101, et seq;
the Safe Drinking Water Act, 42 U.S.C. ss.300f, et seq; and all comparable state
and local laws, and (y) any common law (including common law that may impose
strict liability) that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure to any
Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" has the meaning set forth in Section
4.20(f).
"ERISA Affiliate Plan" has the meaning set forth in Section
4.20(f).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" means an exchange agent designated by Hudson and
reasonably acceptable to Cohoes.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation or
any successor thereto.
"FHLB" means the Federal Home Loan Bank of New York.
"Financial Advisor" means Keefe, Bruyette & Woods, Inc. with
respect to Cohoes, and Sandler O'Neill & Partners, L.P. with
respect to Hudson.
"Financial Statements" means both a Party's Annual Financial
Statements and its Interim Financial Statements.
(a) "Financial Reports" means consolidated balance sheets,
consolidated statements of income and statements of changes in
shareholders' equity and cash flows, including any related notes and
schedules.
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(b) "Annual Financial Statements" means all the Financial
Reports filed in a Party's most recent annual report under the
Securities Laws.
(c) "Interim Financial Statements" means the Financial Reports
filed in all quarterly reports of a Party under the Securities Laws
since the filing of its most recent Annual Financial Statements.
"GAAP" means generally accepted accounting principles applied
consistently with prior practices.
"Governmental Entity" means any federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"HOLA" means the Home Owners' Loan Act, as amended.
"Hudson" means Hudson River Bancorp, Inc., a Delaware
corporation.
"Hudson Option Plan" means the Hudson River Bancorp, Inc.
1998 Stock Option and Incentive Plan.
"Hudson RRP Plan" means the Hudson River Bancorp, Inc. 1998
Recognition and Retention Plan.
"Indemnified Liabilities" has the meaning attributed to it
in Section 6.9.
"Indemnified Parties " has the meaning attributed to it in
Section 6.9.
"Insider Loans" means loans from a Party or any of its Subsidiaries to
any officer, director or employee of that Party or any of its Subsidiaries or
any associate or related interest of any such person.
"IRS" means the Internal Revenue Service or any successor
thereto.
"Knowledge Qualification" means to the best knowledge, after reasonable
investigation, of the Party receiving the benefit of the qualification.
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"Material Adverse Effect" means, with respect to a Party, any effect
that is material and adverse to the condition (financial or otherwise), results
of operations or business of that Party and its Subsidiaries taken as whole, or
that materially impairs the ability of that Party to consummate the Merger,
provided, however, that Material Adverse Effect shall not be deemed to include
the impact of (a) changes in laws and regulations or interpretations thereof
that are generally applicable to the banking or savings institution industries,
(b) changes in GAAP that are generally applicable to the banking or savings
institution industries, (c) expenses incurred in connection with this Agreement
and the Transactions, (d) actions or omissions of a Party (or any of its
Subsidiaries) taken with the prior informed written consent of the other Party
in contemplation of the Transactions or (e) changes attributable to or resulting
from changes in general economic conditions generally affecting financial
institutions, including changes in the prevailing level of interest rates.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Merger" means the merger of Cohoes into Hudson, with Hudson being the
Surviving Corporation.
"Merger Consideration" means 1.185 shares of Surviving Corporation
Common Stock (the "Exchange Ratio") for each share of Cohoes Common Stock,
provided that cash, without interest, is to be paid in lieu of any fractional
share; and provided further, that if the issued and outstanding shares of Cohoes
or Hudson Common Stock shall, during the period commencing on the date hereof
and ending with the Effective Time, through a reorganization, recapitalization,
stock split, reverse stock split, stock dividend, reclassification, combination
of shares or similar corporate rearrangement in the capitalization of Cohoes or
Hudson, as the case may be, increase or decrease in number or be changed into or
exchanged for a different kind or number of securities, then an appropriate and
proportionate adjustment shall be made to the Exchange Ratio.
"OTS" means the Office of Thrift Supervision of the U.S.
Department of the Treasury or any successor thereto.
"Party" means Cohoes or Hudson, whichever is applicable.
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"PBGC" means the Pension Benefit Guaranty Corporation, or
any successor thereto.
"Pension Plan" has the meaning set forth in Section 4.20(c).
"Previously Disclosed" means disclosed in a written disclosure schedule
delivered on or prior to the date hereof by the disclosing Party to the other
Party specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein.
"Proposal" means, with respect to Cohoes, the proposal to adopt this
Agreement and approve the Merger, and, with respect to Hudson, all of the
following proposals:
(1) to adopt this Agreement and approve the Merger and to
approve the issuance of shares of Hudson Common Stock in the Merger;
and
(2) to amend the Hudson Option Plan and Hudson RRP Plan,
respectively, to increase the number of shares of Hudson Common Stock
reserved for issuance thereunder from 1,785,375 to 1,930,241 in the
case of the Hudson Option Plan and from 714,150 to 918,324 in the case
of the Hudson RRP Plan.
"Proxy Statement" means the joint proxy statement/prospectus to be
delivered to shareholders of the Parties in connection with the solicitation of
their approval of the Proposal.
"Registration Statement" means the Registration Statement on Form S-4
(including the Proxy Statement) with respect to shares of Surviving Corporation
Common Stock to be issued in the Merger.
"Regulatory Reports" means all reports, including Securities Documents,
which a Party or any of its Subsidiaries is required to file with any banking or
thrift Governmental Entity or the SEC.
"Restricted Stock" has the meaning attributed to it in
Section 3.1.
"Resulting Institution" means the resulting institution of
the Bank Merger.
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"Rights" means all warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock or other ownership interests, but excluding
the options being granted by each Party to the other Party pursuant to the stock
option agreements in the forms attached as Exhibits A and B hereto,
respectively.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended."
"Securities Documents" means all reports, offering circulars, proxy
statements, registration statements and all similar documents filed, or required
to be filed, pursuant to the Securities Laws.
"Securities Laws" means the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the SEC promulgated thereunder.
"Subsidiary" when used with respect to any Party means any entity,
whether incorporated or unincorporated, which is consolidated with such party
for financial reporting purposes.
"Surviving Corporation" means Hudson after the Merger.
"Thrift Regulations" means the banking laws of the State of New York,
the FDIA, the HOLA and the rules and regulations promulgated thereunder.
"Transactions" means the transactions contemplated by this Agreement,
including the Merger and Bank Merger.
"Year 2000 Compliant" means that all hardware, firmware, software and
computer systems (i) completely and accurately address, produce, store and
calculate data involving dates both before and after January 1, 2000 without
error or interruption; and (ii) provide that all "date"-related functionalities
and data fields include the indication of century and millennium, and perform
calculations which involve a four-digit year.
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1.2 Rules of Interpretation
The captions contained in this Agreement are for reference purposes
only and are not part of this Agreement. All provisions of this Agreement are
subject to applicable law and to the other terms and conditions of this
Agreement. No provision of this Agreement shall be construed to require a party
or its affiliate to take any action which would violate applicable law.
The word "accurate" includes the concept "true and
complete."
The word "agreement" includes every sort of contract, commitment, or
understanding, whether written or oral.
The word "authority" includes the concept "all requisite
power and authority."
The word "authorized" includes the concepts "duly approved and
authorized," "adopted," "advised," and any other similar term which may be
required by law.
All forms of the verb "include" includes the concept
"without limitation."
With respect to any securities, "outstanding" means "issued
and outstanding."
ARTICLE II
PLAN OF MERGER
2.1 The Merger
At the Effective Time, Cohoes shall be merged into Hudson. The separate
corporate existence of Cohoes shall cease, Hudson shall be the Surviving
Corporation, and Hudson shall continue its corporate existence under the DGCL.
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2.2 Surviving Corporation
(a) The name of the Surviving Corporation shall be "Cohoes-Hudson
Bancorp, Inc." The headquarters of the Surviving Corporation shall be located in
the Albany, New York metropolitan
area.
(b) The Certificate of Merger shall amend the Charter of Hudson as of
the Effective Time to (x) change the name of the Surviving Corporation to
Cohoes-Hudson Bancorp, Inc., and (y) to provide until the earlier of (A) six
years after the Effective Time or (B) a business combination approved by the
Board of the Surviving Corporation results in the shareholders of the Surviving
Corporation owning less than 51% of the combined entity that:
(i) the initial Board of the Surviving Corporation shall be
made up of six directors named by a pre-Merger resolution of the Cohoes
Board and six directors named by a pre-Merger resolution of the Hudson
Board;
(ii) the classes to which the directors of the Surviving
Corporation shall be assigned shall be designated in the respective
resolutions of the Parties' Boards according to the following table:
Directors Designated by
Cohoes Hudson
Class expiring in 2001 2 2
Class expiring in 2002 2 2
Class expiring in 2003 2 2
(iii) any vacancy among the directors designated by a Party
shall, subject to the fiduciary duties of the directors of the
Surviving Corporation, be filled from among the pre-merger directors of
that Party who are not already directors or emeritus directors of the
Surviving Corporation. If no such person is available, the vacancy
shall be filled by a person chosen by the remaining directors of the
Surviving Corporation designated by that Party (including any of their
successors in office);
(iv) the Board of Directors of the Surviving Corporation shall, subject
to their fiduciary duties, nominate and recommend all incumbents for reelection
as directors. If an incumbent
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declines to stand for reelection, a candidate will be chosen according to the
procedures of subparagraph (iii) above as if such position was a vacancy and, to
the extent permitted by their fiduciary duties, all directors will vote to
nominate and recommend such candidate to the shareholders. If the directors do
not nominate and recommend such candidate, then the remaining directors of the
Surviving Corporation designated by that Party (including any of their
successors in office) shall choose another candidate according to the procedures
of subparagraph (iii) above until the directors nominate and recommend such
candidate to the shareholders; and
(v) the Charter of Hudson, as so amended, shall be the Charter
of the Surviving Corporation, until amended as provided therein or by
law.
(c) At the Effective Time, the Surviving Corporation shall adopt the
fee policies currently in effect at Cohoes for the payment of director and
committee fees, until such time as such fees are adjusted by action of the Board
of the Surviving Corporation.
(d) Prior to Closing, Hudson shall amend its bylaws to provide that the
positions and duties of the Chief Executive Officer and President shall be
separate and distinct as set forth on Exhibit L hereto and to conform to the
agreements of the Parties reflected herein, and such bylaws shall be the bylaws
of the Surviving Corporation, until amended as provided therein or by law. For
the first six years after the Effective Time, the bylaws of the Surviving
Corporation shall be amended only at such times as there are no vacancies on the
Board of the Surviving Corporation.
(e) At the Effective Time, the executive officers of the Surviving
Corporation shall be:
Chairman and Chief Executive Officer Harry L. Robinson
Vice Chairman and President Carl A. Florio
CFO Timothy E. Blow
COO and Executive Vice President Richard A. Ahl
Executive Vice President Sidney D. Richter
(f) It is the intention of the Parties to use the Nasdaq trading symbol
"COHB" for the Surviving Corporation Common Stock.
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2.3 Closing
Within 30 days following the satisfaction or waiver of all the
conditions set forth in Article VII (other than the delivery of certificates,
opinions and other instruments and documents to be furnished at Closing), the
Closing shall take place on a date and at a time and place mutually designated
in writing by the Parties. The Certificate of Merger shall be filed on the
Closing Date.
2.4 Treatment of Capital Stock
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
person or entity:
(a) Each share of Hudson Common Stock shall continue unchanged
as a share of Surviving Corporation Common Stock.
(b) All Cohoes-Owned Shares shall be canceled and retired
without consideration or conversion.
(c) Each other outstanding share of Cohoes Common Stock shall
be converted into the right to receive the Merger Consideration.
2.5 Shareholder Rights; Stock Transfers
At the Effective Time, holders of Certificates shall cease to be and
shall have no rights as shareholders of Cohoes. After the Effective Time, there
shall be no transfers on the stock transfer books of Cohoes. If Certificates are
presented for transfer after the Effective Time, they shall be delivered to the
Surviving Corporation or the Exchange Agent for cancellation against delivery,
without interest, of the Merger Consideration.
2.6 Fractional Shares
No fractional shares of Surviving Corporation Common Stock will be
issued in the Merger; instead, the Surviving Corporation shall pay to each
Certificate holder who would otherwise be entitled to a fractional share an
amount in cash (without interest) determined by multiplying such fraction by the
closing sale price of Hudson Common Stock, as reported by the Nasdaq reporting
system (as reported in The Wall Street Journal or, if not reported therein, in
another authoritative source), for the
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last trading day immediately preceding the Closing Date. No dividend or
distribution with respect to Hudson Common Stock shall be payable on or with
respect to any fractional share interest, and no such fractional share interest
shall entitle the owner thereof to vote or to any other rights of a shareholder.
For the purposes of determining any such fractional share interests, all shares
of Surviving Corporation Common Stock to be issued to a Cohoes shareholder in
the Merger shall be combined so as to calculate the maximum number of whole
shares of Surviving Corporation Common Stock issuable to such Cohoes
shareholder.
2.7 Options
At the Effective Time, each then outstanding Cohoes Option which was
also outstanding on the date hereof shall be assumed by the Surviving
Corporation, shall continue to be outstanding, and shall represent an option to
purchase Surviving Corporation Common Stock subject to the same terms and
conditions, but in an amount and at an exercise price determined as provided
below:
(a) the number of shares of Surviving Corporation Common Stock
to be subject to the continuing option shall be equal to the product of
the number of shares of Cohoes Common Stock subject to the Cohoes
Option immediately prior to the Effective Time and the Exchange Ratio,
rounded to the nearest whole share; and
(b) the exercise price per share of Surviving Corporation
Common Stock under the continuing option shall be equal to the exercise
price per share of Cohoes Common Stock under the Cohoes Option
immediately prior to the Effective Time divided by the Exchange Ratio,
rounded to the nearest whole cent.
It is intended that the foregoing assumption shall be undertaken
consistent with and in a manner that will not constitute a "modification" under
Section 424 of the Code as to any Cohoes Option which is an "incentive stock
option".
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2.8 Exchange Procedures
(a) At or prior to the Effective Time, Hudson shall deposit
with the Exchange Agent certificates representing shares of Surviving
Corporation Common Stock (and an estimated amount of cash for
fractional shares) equal to the aggregate Merger Consideration.
(b) As promptly as practicable after the Effective Time, the
Exchange Agent shall send transmittal materials to each holder of
record of Certificates, which transmittal materials shall specify that
risk of loss and title to Certificates shall pass only upon acceptance
of such Certificates by the Surviving Corporation or the Exchange
Agent. Upon acceptance of a Certificate (or indemnity reasonably
satisfactory to the Surviving Corporation and the Exchange Agent, if
any of such Certificates are lost, stolen or destroyed) the Exchange
Agent shall deliver the Merger Consideration. The Surviving Corporation
and the Exchange Agent shall be entitled to conclusively rely upon the
stock transfer books of Cohoes to establish the identity of the
Certificate holders. In the event of a dispute with respect to
ownership of any Certificate, the Surviving Corporation or the Exchange
Agent shall be entitled to deposit any consideration in respect thereof
in escrow with an independent third party and thereafter be relieved
with respect to any claims thereto.
(c) Neither the Exchange Agent nor any Party shall be liable
to any Certificate holder for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar
laws.
(d) No holder of an unsurrendered Certificate shall be
eligible to receive dividends or distributions on Surviving Corporation
Common Stock. Upon exchange of a Certificate for Surviving Corporation
Common Stock, the holder thereof shall be entitled to receive any
dividends or distributions, without interest, declared and paid after
the Effective Time.
(e) Any cash and certificates for Surviving Corporation Common
Stock which remain unclaimed six months after the Effective Time shall
be returned to the Surviving Corporation. Certificate holders shall
thereafter look only to the Surviving Corporation for payment of the
Merger
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Consideration and unpaid dividends and distributions thereon.
2.9 Additional Actions
If, at any time after the Effective Time, the Surviving Corporation
shall consider that any further assignments or assurances in law or any other
acts are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of Cohoes acquired by the
Surviving Corporation in the Merger, or (ii) otherwise carry out the purposes of
this Agreement, Cohoes and its proper officers and directors shall be deemed to
have granted to the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such proper deeds, assignments and assurances in law and
to do all acts necessary or proper to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving Corporation and
otherwise to carry out the purposes of this Agreement; and the proper officers
and directors of the Surviving Corporation are fully authorized in the name of
Cohoes or otherwise to take any and all such action.
ARTICLE III
MUTUAL REPRESENTATIONS AND WARRANTIES
WITH RESPECT TO THE PARTIES
As of the date hereof, and except as Previously Disclosed, each Party
represents and warrants to the other Party as follows:
3.1 Capital Structure
Its authorized and issued and outstanding capital stock is correctly
set forth in the table below. All issued and outstanding shares of its stock
have been duly authorized and validly issued, are fully paid and nonassessable,
and have not been issued in violation of the preemptive rights of any person.
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Stock Authorized Issued Treasury Outstanding
--------------------------------------------------------------------------
Cohoes Common 25,000,000 9,535,225 1,622,970 7,912,225
Stock
Cohoes 5,000,000 None None None
Preferred Stock
Hudson Common 40,000,000 17,853,750 2,307,190 15,546,560
Stock
Hudson 5,000,000 None None None
Preferred
Stock
Its outstanding Rights and shares of outstanding Common Stock subject
to restriction ("Restricted Stock") are correctly set forth in the table below.
It has Previously Disclosed a schedule of its Rights and Restricted Stock that
includes the name of each optionee and holder of Restricted Stock, the number of
options held by each optionee, the number of shares of Restricted Stock held by
each holder thereof, the exercise price of each option and the vesting date of
each option and of each share of Restricted Stock.
Outstanding Restricted
Rights Stock
---------------------------------------
Cohoes 860,555 344,972
Hudson 1,151,465 630,677
3.2 Registrations
It is duly registered as a savings and loan holding company under the
HOLA and is registered under the Exchange Act.
3.3 Subsidiaries
It has Previously Disclosed a list of all its Subsidiaries. All
outstanding shares or ownership interests of its Subsidiaries are validly
issued, fully paid, nonassessable and owned beneficially and of record by it or
one of its Subsidiaries free and clear of any Encumbrance. There are no Rights
authorized, issued or outstanding with respect to any of its Subsidiaries. All
eligible accounts of each of its savings bank Subsidiaries are insured by the
FDIC to the maximum extent permitted by law.
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3.4 This Agreement
(a) It has authority to enter into this Agreement, and any
other documents and instruments that are executed by it on the date
hereof that relate to the Transactions and, subject to any necessary
approvals from Governmental Entities and/or its shareholders, to
consummate the Transactions.
(b) Its Board has authorized the execution, delivery and
performance of this Agreement and any other documents and instruments
that are executed by it on the date hereof that relate to the
Transactions and the consummation of the Transactions. It has properly
executed and delivered this Agreement and any other documents and
instruments that are executed by it on the date hereof that relate to
the Transactions, which are its valid and binding obligations, and
neither this Agreement nor any of such other documents or instruments
executed by it on the date hereof that relate to the Transactions
violates its Charter, bylaws, or any law, judgment or order of any
Governmental Entity applicable to it.
(c) No "business combination," "moratorium," "control share"
or other state anti-takeover statute or regulation prohibits, restricts
or subjects to any material condition its ability to perform its
obligations under this Agreement or any of the other documents or
instruments that are executed by it on the date hereof that relate to
the Transactions.
3.5 Financial Statements; No Adverse Change
It has Delivered Financial Statements which have been prepared in
accordance with GAAP, fairly present its consolidated financial position, and
contain adequate reserves for losses. Since the period covered by its most
recent Annual Financial Statements Delivered prior to the date hereof, it and
its Subsidiaries have conducted their businesses only in the ordinary course and
it has not suffered a Material Adverse Effect. Except as disclosed in such
Annual Financial Statements, no circumstances exist that could reasonably be
expected to result in a Material Adverse Effect. It and its Subsidiaries have no
liabilities, known or unknown, asserted or unasserted, absolute, contingent or
otherwise, that are required under GAAP to be
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reflected in audited financial statements or the notes thereto which are not
reflected in its Annual Financial Statements other than liabilities incurred in
the ordinary course of business since such date.
3.6 Fairness Opinion
It has received an opinion from its Financial Advisor to the effect
that, as of the date hereof, the Exchange Ratio utilized to determine Merger
Consideration is fair, from a financial point of view, to its shareholders.
3.7 Interim Events
Except as Previously Disclosed, since its most recent Interim Financial
Statements it has not paid or declared any dividend (other than its regular
quarterly cash dividend) or made any other distribution to shareholders or taken
any action (other than loan originations) which if taken after the date hereof
would require the prior written consent of the other Party hereunder.
ARTICLE IV
MUTUAL REPRESENTATIONS AND WARRANTIES WITH RESPECT TO
THE PARTIES AND THEIR SUBSIDIARIES
As of the date hereof, except as Previously Disclosed and subject to
the standard set forth in Section 9.8, each Party as to itself and separately as
to each of its Subsidiaries, represents and warrants to the other Party as
follows:
4.1 Organization and Good Standing
It is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has authority to own, operate and
lease its assets and properties and to carry on its business. It is qualified to
do business and is in good standing in each jurisdiction where the character of
its assets or the nature of its business requires it to be qualified. It has
Delivered accurate copies of its Charter and bylaws as currently in effect. Its
minute books contain complete and accurate records of all meetings and other
corporate actions taken by its shareholders and Board. Its stock ledgers reflect
all transactions in its capital stock, since its inception.
4.2 Compliance with Law
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(a) It is in compliance with all laws, regulations,
ordinances, rules, judgments, orders or decrees applicable to its
operations and business.
(b) It has all permits, licenses, certificates of authority,
orders and approvals of, and has made all filings, applications and
registrations with, all Governmental Entities that are required in
order to permit it to carry on its business as it is presently being
conducted.
(c) It has not received in the last three years any
notification or communication from any Governmental Entity or the staff
thereof asserting that it was not in compliance with any statutes,
regulations or ordinances, threatening to revoke any license,
franchise, permit or authorization; or threatening or contemplating any
enforcement action.
(d) It is not required to give prior notice to any regulatory
agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive
officer.
4.3 Regulatory Reports
For the past three years it has timely filed all Regulatory Reports.
These Regulatory Reports, as finally amended, complied with applicable
requirements of law and, as of their respective dates or the dates as amended,
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. It has Delivered all Regulatory Reports for the past year.
4.4 Governmental Approvals
No approval of, or filing with, any Governmental Entity is required by
it for the consummation of the Transactions except for:
(a) Any filings or approvals under the Thrift Regulations.
(b) The effectiveness of the Registration Statement.
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(c) The filing of the Certificate of Merger.
(d) Any state securities filings.
(e) Any anti-trust filings or approvals.
(f) Listing of the Surviving Corporation Common Stock
on the Nasdaq National Market.
It is not aware of any reasons relating to it why such consents and
approvals should not be granted, free of any conditions or requirements which
would materially reduce the value of the Transactions.
4.5 No Violations
Neither the execution of this Agreement nor the consummation of the
Transactions will result in any violation, breach, termination, default or loss
of a material benefit under, or permit the acceleration of any obligation under,
or require the consent of a third party under, or result in the creation of any
Encumbrance on any of the property or assets under, any of its agreements or
other instruments.
4.6 No Broker's or Finder's Fees
No agent, broker, investment banker, person or firm acting on its
behalf or under its authority will be entitled to any fee or commission in
connection with the Transactions.
4.7 Equity Holdings
It does not own more than 2% of the capital stock or other equity
securities (including securities convertible or exchangeable into such
securities) of or more than 2% of the aggregate profit participations in any
entity other than a Subsidiary.
4.8 Litigation and Other Proceedings
It is not a defendant in nor is any of its property subject to any
pending (or, subject to the Knowledge Qualification, threatened), claim, action,
suit, investigation or proceeding or subject to any judicial order, judgment or
decree.
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4.9 Environmental Matters
(a) It is in compliance with all Environmental Laws. It has
not received any communication alleging that it is not in such
compliance and, subject to the Knowledge Qualification, there are no
present circumstances that would prevent or interfere with the
continuation of such compliance.
(b) Subject to the Knowledge Qualification, none of the
properties owned, leased or operated by it has been or is in violation
of or liable under any Environmental Law.
(c) Subject to the Knowledge Qualification, there are no past
or present actions, activities, circumstances, conditions, events or
incidents that could reasonably form the basis of any Environmental
Claim or other claim or action or governmental investigation that could
result in the imposition of any liability against or obligation on the
part of it or any person or entity whose liability or obligation for
any Environmental Claim it has or may have retained or assumed either
contractually or by operation of law.
(d) It has not conducted (i) any phase one environmental
investigations during the past three years (other than in connection
with loan originations or purchases) or (ii) any phase two
environmental investigations during the past five years, in each case,
with respect to any properties owned by it, leased by it or securing
loans held by it.
4.10 Tax Matters
(a) It has timely filed all federal, state and local (and, if
applicable, foreign) income, franchise, bank, excise, real property,
personal property and other tax returns required by applicable law to
be filed by it (including estimated tax returns, income tax returns,
information returns and withholding and employment tax returns) and has
paid, or where payment is not required to have been made, has set up an
adequate reserve or accrual for the payment of, all taxes in respect of
the periods covered by such returns and, as of the Effective Time, will
have paid, or where payment is not required to have been made will have
set up an adequate reserve or accrual for the
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payment of, all taxes for any subsequent periods ending on or prior to
the Effective Time. It will not have any liability for any such taxes
in excess of the amounts so paid or reserves or accruals so
established.
(b) All federal, state and local (and, if applicable, foreign)
income, franchise, bank, excise, real property, personal property and
other tax returns filed by it are accurate. It either is not delinquent
in the payment of any tax, assessment or governmental charge or has
requested an extension of time without penalty within which to file any
tax returns in respect of any fiscal year or portion thereof. Its
federal, state and local income tax returns that are open to audit have
not been audited by the applicable tax authorities and no deficiencies
for any tax, assessment or governmental charge have been proposed,
asserted or assessed (tentatively or otherwise) against it which have
not been settled and paid. There are currently no agreements in effect
with respect to it to extend the period of limitations for the
assessment or collection of any tax. No audit, examination or
deficiency or refund litigation with respect to any such return is
pending or, subject to the Knowledge Qualification, threatened.
(c) It (i) is not a party to any agreement providing for the
allocation or sharing of taxes, (ii) is not required to include in
income any adjustment pursuant to Section 481(a) of the Code or by
reason of any change in accounting method (nor does it have any
knowledge that the IRS has proposed any such adjustment or change of
accounting method) and (iii) has not filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the
Code apply.
(d) It has withheld amounts from its employees, shareholders,
and holders of public deposit accounts in compliance with the tax
withholding provisions of applicable federal, state and local laws, has
filed all federal, state and local returns and reports for all periods
for which such returns or reports would be due with respect to income
tax withholding, social security, unemployment taxes, income and other
taxes and all payments or deposits with respect to such taxes have been
timely made.
4.11 Year 2000 Compliant
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All its hardware, firmware, software and computer systems are Year 2000
Compliant and shall continue to function in accordance with their intended
purpose without error or interruption because of a date in the twenty-first
century during and after the year 2000.
4.12 Insurance
It is insured for reasonable amounts with financially sound and
reputable insurance companies against such risks as companies or institutions
engaged in a similar business would, in accordance with good business practice,
customarily be insured and has maintained all insurance required by its
agreements and applicable laws and regulations. It has not, during the past five
years, had an insurance policy canceled or non-renewed or been denied any
insurance coverage for which it has applied.
4.13 Labor
No work stoppage involving it is pending or, subject to the Knowledge
Qualification, threatened. It is not involved in or, subject to the Knowledge
Qualification, threatened with or affected by, any labor dispute, discrimination
or sexual harassment claims, arbitration, lawsuit or administrative proceeding
involving any of its employees. It is not a party to any collective bargaining
agreement.
4.14 Indemnification
Subject to the Knowledge Qualification, no action or failure to take
action by any present or former director, advisory director, officer, employee
or agent of it has occurred which would give rise to a claim or a potential
claim by any such person for indemnification from it.
4.15 Loan Portfolio
Each loan reflected as an asset on its Annual Financial Statements and
each loan originated or acquired thereafter is evidenced by appropriate and
sufficient documentation and constitutes a legal, valid and binding obligation
of the obligor named therein, enforceable in accordance with its terms, except
to the extent that the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
or doctrines. All such loans are free and clear of any Encumbrance, other than
the lien of the
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FHLB. It has no loan or other asset that has been classified by examiners or
others as "Other Loans of Concern," "Substandard," "Doubtful" or "Loss." It has
Previously Disclosed a complete list of the real estate acquired by it through
foreclosure, repossession or deed in lieu thereof which are currently held by
it.
4.16 Investment Portfolio
All investment securities held by it are carried on its financial books
and records in accordance with GAAP. Except for pledges to secure public and
trust deposits, none of its investment securities are subject to any
restriction, whether contractual or statutory, which materially impairs its
ability to freely dispose of such investment securities at any time, other than
those restrictions imposed on securities held to maturity under GAAP.
4.17 Defaults
There has not been any default in any obligation to be performed by it
under any agreement and it has not waived any material right under any
agreement. Subject to the Knowledge Qualification, no other party to any
agreement is in default in any obligation to be performed by such party.
4.18 Real Estate Loans and Investments
Except for properties acquired by it in settlement of loans, there are
no facts, circumstances or contingencies known to it which exist and would
require a reduction under GAAP in the present carrying value of any of its real
estate investments, joint ventures, construction loans, other investments or
other loans (either individually or in the aggregate with its other loans and
investments).
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4.19 Derivatives Contracts
It is not a party to and has not agreed to enter into an
exchange-traded or over-the-counter swap, forward, future, option, cap, floor or
collar financial contract or any other contract not included in its Annual
Financial Statement which is a derivatives contract (including various
combinations thereof) and it does not own any securities that are identified in
OTS Thrift Bulletin No. 65 or otherwise referred to as structured notes.
4.20 Employee Benefit Plans
(a) It has Previously Disclosed all Employee Plans (other than
those that relate to benefits which previously have been fully accrued
as a liability or expensed and for which there is no future financial
reporting obligation) and has heretofore delivered accurate copies of
each (including amendments and agreements relating thereto) together
with, in the case of qualified plans, (i) the most recent financial
reports and actuarial reports prepared with respect thereto, (ii) the
most recent annual reports filed with any Governmental Entity with
respect thereto, and (iii) all rulings and determination letters and
any open requests for rulings or letters that pertain thereto.
(b) Each Employee Plan has been operated and administered in
accordance with its terms and with applicable law, including, to the
extent applicable, ERISA, the Code, the Securities Act, the Exchange
Act, the Age Discrimination in Employment Act, and the regulations or
rules promulgated thereunder; and all filings, disclosures and notices
required by ERISA, the Code, the Securities Act, the Exchange Act, the
Age Discrimination in Employment Act and any other applicable law have
been timely made.
(c) Each Employee Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan")
and which is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter (including a
determination that the related trust under such Pension Plan is exempt
from tax under Section 501(a) of the Code) from the IRS, and it is not
aware of any circumstances likely to result in revocation of any such
favorable determination letter.
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(d) There is no pending or, subject to the Knowledge
Qualification, threatened legal action, suit or claim relating to any
Employee Plan (other than routine claims for benefits) or against any
related trust thereto or fiduciary thereof.
(e) It has not engaged in a transaction, or omitted to take
any action, with respect to any Employee Plan that has or would
reasonably be expected to subject it to a tax or penalty imposed by
either Section 4975 of the Code or Section 502 of ERISA, assuming for
purposes of Section 4975 of the Code that the taxable period of any
such transaction expired as of the date hereof.
(f) No liability (other than for payment of premiums to the
PBGC which have been made or will be made on a timely basis) under
Title IV of ERISA has been or is expected to be incurred by it with
respect to any ongoing, frozen or terminated "single-employer plan",
within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by it, or any single-employer plan of any entity
(an "ERISA Affiliate") which is considered one employer with it under
Section 4001(a)(14) of ERISA or Section 414(b) or (c) of the Code (an
"ERISA Affiliate Plan").
(g) Neither it nor any ERISA Affiliate has contributed, or has
been obligated to contribute, to a multiemployer plan under Subtitle E
of Title IV of ERISA at any time since September 26, 1980.
(h) No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any Employee Plan or
by any ERISA Affiliate Plan within the 12-month period ending on the
date hereof. The PBGC has not instituted proceedings to terminate any
Pension Plan or ERISA Affiliate Plan and, subject to the Knowledge
Qualification, no condition exists that presents a risk that such
proceedings will be instituted by the PBGC.
(i) There is no pending investigation or enforcement action by
the PBGC, DOL or IRS or any other Governmental Entity with respect to
any Employee Plan.
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(j) Under each Pension Plan and ERISA Affiliate Plan that is a
defined benefit plan, as of the date of the most recent actuarial
valuation performed prior to the date hereof, the actuarially
determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in such actuarial valuation of such
Pension Plan or ERISA Affiliate Plan), did not exceed the then current
value of the assets of such Pension Plan or ERISA Affiliate Plan and
since such date there has been neither a material adverse change in the
financial condition of such Pension Plan or ERISA Affiliate Plan nor
any amendment or other change to such Pension Plan or ERISA Affiliate
Plan that would increase the amount of benefits thereunder which
reasonably could be expected to change such result.
(k) All contributions required to be made under the terms of
any Employee Plan or ERISA Affiliate Plan have been timely made.
(l) Neither any Pension Plan nor any ERISA Affiliate Plan has
an "accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and all
required payments to the PBGC with respect to each Pension Plan or
ERISA Affiliate Plan have been made on or before their due dates.
(m) Neither it nor any ERISA Affiliate (i) has provided, or
would reasonably be expected to be required to provide, security to any
Pension Plan or to any ERISA Affiliate Plan pursuant to Section
401(a)(29) of the Code, or (ii) has taken any action, or omitted to
take any action, that has resulted, or would reasonably be expected to
result, in the imposition of an Encumbrance under Section 412(n) of the
Code or pursuant to ERISA.
(n) It has no obligation to provide retiree health and life
insurance or other retiree death benefits under any Employee Plan,
other than benefits mandated by Section 4980B of the Code. There has
been no communication to its employees that would reasonably be
expected to promise or guarantee such employees retiree health or life
insurance or other retiree death benefits.
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(o) It has neither made any payments, nor is obligated to make
any payments by virtue of the consummation of any of the Transactions
or otherwise, nor a party to any agreement or any Employee Plan, that
under any circumstances could obligate it or its successor to make
payments or deemed payments that (i) are not or will not be deductible
because of Sections 162(m) or 280G of the Code or (ii) require the
Surviving Corporation or any of its Subsidiaries to record any charge
or expense therefor (or any tax gross-up payments) for financial
reporting purposes on a post-acquisition basis. Neither the execution
of this Agreement nor the consummation of the Transactions will
constitute a change in control for purposes of any of the Hudson
Employee Plans or any of the employment agreements, change in control
severance agreements, severance compensation plan or benefit
restoration plan to which Hudson or any of its Subsidiaries is a party.
4.21 Properties
(a) All real and personal property owned by it or presently
used in its business is in good condition (ordinary wear and tear
excepted) and is sufficient to carry on its business in the ordinary
course of business consistent with its past practices. It has good and
marketable title free and clear of all Encumbrances (other than
equitable rights of redemption laws relating to property acquired by it
in foreclosure) to all of its properties and assets, real and personal,
except
(i) liens for current taxes not yet due or
payable,
(ii) pledges to secure deposits,
(iii) such imperfections of title, easements and
non-monetary Encumbrances affecting real property, if any,
which do not adversely affect the value or use of such real
property, and
(iv) any monetary Encumbrances, reflected in its
Annual Financial Statements.
(b) All real and personal property that is leased or licensed
by it is held pursuant to leases or licenses which are valid and
enforceable in accordance with their
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respective terms and such leases and licenses will not terminate or
lapse prior to the Effective Time or thereafter by reason of completion
of the Transactions. All improved real property owned or leased by it
is in compliance with all applicable laws including zoning laws.
4.22 Certain Agreements
It is not a party to, is not bound or affected by, and does not receive
and is not obligated to pay benefits (other than those that relate to benefits
which previously have been fully accrued as a liability or expensed and for
which there is no future financial reporting obligation) under:
(a) any agreement, arrangement or commitment, including any
agreement, indenture or other instrument, relating to the borrowing of
money by it (other than in the case of deposits, FHLB advances and
federal funds purchased) or the guarantee by it of any obligation;
(b) any agreement, arrangement or commitment relating to the
employment of a consultant or the employment, election or retention in
office of any present or former director, advisory director, officer or
employee;
(c) any agreement, arrangement or understanding pursuant to
which any payment (whether of severance pay or otherwise) is or may
become due to any present or former director, advisory director,
officer or employee;
(d) any agreement, arrangement or understanding pursuant to
which it is obligated to indemnify any present or former director,
advisory director, officer, employee or agent;
(e) any agreement, arrangement or understanding which limits
its freedom to compete in any line of business or with any person;
(f) any agreement, arrangement or understanding which would be
required to be filed as an exhibit to its Annual Report on Form 10-K
under the Exchange Act and which has not been so filed;
(g) any agreement pursuant to which loans have been sold by
it, which impose any potential recourse obligations
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(by representation, warranty, covenant or other contractual
terms) upon it; or
(h) any subservicing agreement.
4.23 Material Interests of Certain Persons
(a) No officer, director or employee of it or any "associate"
(as such term is defined in Rule 14a-1 under the Exchange Act) or
related interest of any such person has any material interest in any
material agreement or property (real or personal, tangible or
intangible), used in, or pertaining to, its business.
(b) Except as set forth in its proxy statement for its most
recent annual meeting of shareholders there are no outstanding Insider
Loans. All outstanding Insider Loans were made in the ordinary course
of business and on substantially the same terms as those prevailing at
the time for comparable transactions with third parties and were, with
respect to executive officers and directors, approved by its Board in
accordance with applicable law and regulations.
4.24 No Impediments
It has not taken or agreed to take any action, nor does it have
knowledge of any fact or circumstance, that would (i) materially impede or delay
the consummation of the Transactions or the ability of the Parties to obtain any
approval of any Governmental Entity required for consummation of the
Transactions or to perform their covenants and agreements under this Agreement
or (ii) prevent the Transactions from qualifying as reorganizations within the
meaning of Section 368(a) of the Code.
4.25 Liquidation Account
In the case of the savings bank Subsidiary of a Party, the liquidation
account established by it in connection with its conversion from mutual to stock
form has been maintained since its establishment in accordance with applicable
laws and the records with respect to said account are accurate.
4.26 Disclosures
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None of the representations and warranties by a Party as to itself or
its Subsidiaries pursuant to Articles III, IV or V hereof or any of the
information Previously Disclosed or Delivered by a Party or on its behalf,
contains any untrue statement of a material fact, or omits to state any material
fact required to be stated or necessary to make any such information, in light
of the circumstances, not misleading.
ARTICLE V
ADDITIONAL REPRESENTATIONS AND
WARRANTIES OF COHOES
As of the date hereof, and except as Previously Disclosed, Cohoes
represents and warrants to Hudson as follows:
5.1 Registration Obligations
Cohoes is not under any obligation, contingent or otherwise, which will
survive the Effective Time by reason of any agreement to register any of its
securities under the Securities Act or other federal or state securities laws or
regulations.
ARTICLE VI
COVENANTS
6.1 Reasonable Best Efforts
Subject to the terms and conditions of this Agreement, each Party shall
use its reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary or advisable under
applicable laws and regulations so as to permit and otherwise enable completion
of the Merger as promptly as reasonably practicable, and shall cooperate fully
with the other to that end. Prior to the Closing (or earlier if necessary or
appropriate to facilitate any of the Transactions), Cohoes shall take all
necessary action to delete Section 7 of the Charter of its savings bank
Subsidiary.
6.2 Shareholders' Meetings
Each Party shall take all action necessary to properly call and convene
a meeting of its shareholders as soon as practicable after the date hereof to
consider and vote upon its Proposal. The Board of each Party will recommend that
its shareholders approve its Proposal.
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6.3 Regulatory Matters
(a) The Parties shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications (including applications for
the Bank Merger), notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and
authorizations of all Governmental Entities and third parties which are
necessary or advisable to consummate the Transactions. Each Party shall
have the right to review in advance, and to the extent practicable each
will consult with the other on, in each case subject to applicable laws
relating to the exchange of information, all the information which
appears in any filing made by the other Party or written materials
submitted by the other Party to any third party or any Governmental
Entity in connection with the Transactions. In exercising the foregoing
right, each of the Parties shall act reasonably and as promptly as
practicable. The Parties agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary
or advisable to consummate the Transactions and each Party will keep
the other appraised of the status of matters relating to completion of
the Transactions. The Parties agree that they will use their reasonable
best efforts to cause the Closing Date to occur by September 30, 2000.
(b) Each Party shall, upon the request of the other Party,
furnish such other Party with all information concerning itself, its
present and former directors and officers, its shareholders and such
other matters as may be reasonably necessary or advisable in connection
with any statement, filing, notice or application made to any
Governmental Entity in connection with the Transactions.
(c) Each Party shall promptly furnish the other Party with
copies of written communications received from, or delivered to, any
Governmental Entity in respect of the Transactions.
6.4 Investigation and Confidentiality
(a) Each Party shall permit the other Party and its
representatives reasonable access to its and its
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Subsidiaries properties and personnel, and shall disclose and make
available upon reasonable request to the extent such disclosure is
permitted by law and will not result in the loss or potential loss of
any attorney-client privilege, all books, papers and records relating
to its and its Subsidiaries assets, stock ownership, properties,
operations, obligations and liabilities, including all books of account
(including the general ledger), tax records, minute books of meetings
of boards of directors (and any committees thereof) and shareholders,
Charter, bylaws, material agreements, filings with any Governmental
Entity, accountants' work papers, litigation files, loan files, plans
affecting employees, and any other business activities or prospects in
which the examining Party may have a reasonable interest, provided that
such access and any such reasonable request shall be reasonably related
to the Transactions and shall not unduly interfere with normal
operations of the other Party and its Subsidiaries. Each Party shall
make its directors, officers, employees and agents and authorized
representatives (including counsel and independent public accountants)
and those or its Subsidiaries available to confer with the other Party
and its representatives, provided that such access shall be reasonably
related to the Transactions and shall not unduly interfere with the
normal operations of such Party and its Subsidiaries.
(b) All information furnished previously in connection with
the Transactions or pursuant hereto shall be treated as the sole
property of the Party furnishing the information until completion of
the Merger and, if the Merger shall not occur, the Party receiving the
information shall either destroy or return to the furnishing Party all
documents or other materials containing, reflecting or referring to
such information, shall use its best efforts to keep confidential all
such information, and shall not directly or indirectly use such
information for any competitive or other commercial purposes. The
obligation to keep such information confidential shall continue for
five years from the date of this Agreement but shall not apply to (i)
any information which (x) the Party receiving the information can
establish was already in its possession prior to the disclosure thereof
by the other Party; (y) was then generally known to the public; or (z)
became known to the public through no fault of the Party receiving the
information; or (ii) disclosures pursuant to a legal requirement or in
accordance
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with an order of a court of competent jurisdiction, provided that the
Party which is the subject of any such legal requirement or order shall
use its best efforts to give the other Party at least ten business
days' prior notice thereof.
6.5 Press Releases
The Parties shall mutually agree as to the form and substance of any
press release related to this Agreement or the Transactions, and consult with
each other as to the form and substance of other public disclosures which may
relate to the Transactions, provided, however, that nothing contained herein
shall prohibit either Party, following notification to the other Party, from
making any disclosure which such Party believes is required by law or
regulation.
6.6 Business of the Parties
(a) During the period from the date of this Agreement and
continuing until the Effective Time, except as expressly contemplated
or permitted by this Agreement or with the prior written consent of the
other Party, each Party shall carry on its business and cause its
Subsidiaries to carry on their businesses only in the ordinary course
consistent with past practice. During such period, each Party also will
use, and will cause each of its Subsidiaries to use, all reasonable
efforts to (x) preserve its business organization intact, (y) keep
available the present services of its employees and (z) preserve the
goodwill of its customers and others with whom business relationships
exist. Without limiting the generality of the foregoing, except with
the prior written consent of the other Party or as expressly
contemplated hereby, between the date hereof and the Effective Time,
neither Party nor any of its Subsidiaries shall:
(i) declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, except
for (A) the declaration and payment of regular quarterly cash
dividends by Cohoes in an amount not in excess of $0.07 per
outstanding share of Cohoes Common Stock and the declaration
and payment of regular quarterly cash dividends by Hudson in
an amount not in excess of $0.05 per outstanding
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share of Hudson Common Stock, in each case with usual record
and payment dates for such dividends consistent with such
Parties' past dividend practices; provided however, the
declaration of the last quarterly dividend by Cohoes prior to
the Effective Time and the payment thereof shall be
coordinated with, and subject to the approval of (which
approval will not be unreasonably withheld), Hudson so as to
preclude any duplication of dividends (it being the intention
of the Parties that holders of Cohoes Common Stock shall not
receive a dividend from both Parties relating to such period,
or fail to receive one dividend relating to such period); and
provided further that the initial dividend for the first full
quarterly dividend period subsequent to the Effective Time
shall be equal to $0.06 per share of Surviving Corporation
Common Stock, and (B) dividends or distributions by a wholly
owned Subsidiary of a Party to such Party;
(ii) issue any shares of its capital stock, other
than upon the exercise of options outstanding on the date
hereof to acquire a Party's Common Stock; issue, grant, modify
or authorize any Rights; purchase any shares of its Common
Stock; or effect any recapitalization, reclassification, stock
dividend, stock split or like change in capitalization;
(iii) amend its Charter or bylaws; or waive or
release any material right or cancel or compromise any
material debt or claim;
(iv) increase the rate of compensation of any of its
directors, officers or employees, or pay or agree to pay any
bonus or severance to, or provide any other new benefit or
incentive to, any of its directors, officers or employees,
except (A) as may be required pursuant to Previously Disclosed
commitments existing on the date hereof;(B) as may be required
by law; (C) merit increases in accordance with past practices,
normal cost-of-living increases, and normal increases related
to promotions or increased job responsibilities, in each case
consistent with past practices; (D) bonuses under plans and
programs Previously Disclosed in amounts consistent with past
practices (even though the amounts thereof are subject to
Board discretion and have not been heretofore
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determined) which bonuses may be paid on a pro rata basis
through the end of the month preceding the Closing Date;
and(E) Cohoes may make amendments to the Cohoes ESOP Plan and
the profit sharing plan portion of the Cohoes 401(k) Plan to
permit it and its Subsidiaries to make contributions thereto,
and Cohoes and its Subsidiaries shall be permitted to make
contributions thereto, on a pro rata basis for the period from
January 1, 2000 through the end of the month preceding the
Closing Date.
(v) enter into or, except as may be required by law,
modify any Employee Plan or other benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers
or employees;
(vi) originate or purchase any loan in excess of $1
million without prior notification to the other Party;
(vii) except as otherwise permitted hereunder, enter
into (v) any agreement for the purchase, sale, transfer or
other disposition of any material properties or material
assets (other than real estate acquired in foreclosure (or by
deed in lieu thereof) or repossessed assets, in each case,
with a carrying value on a Party's Financial Reports of less
than $1,000,000 individually) or the placing of any
Encumbrance thereon or (w) any other transaction, agreement,
arrangement or commitment not made in the ordinary course of
business, (x) any agreement, indenture or other instrument
relating to its borrowing of money or its guarantee of any
such obligation, except for deposits, FHLB advances not to
exceed one year to maturity, federal funds purchased and
securities sold under agreements to repurchase in the ordinary
course of business consistent with past practice, (y) any
agreement, arrangement or commitment relating to the
employment of an employee or consultant, or amend any such
existing agreement, arrangement or commitment; provided that a
Party or its Subsidiaries may employ an employee or consultant
in the ordinary course if the employment of such employee or
consultant is terminable by such Party or its Subsidiary, as
the case may be, at will without liability, other than as
required by law; and that the
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term of the employment agreements and change in control
severance agreements existing as of the date hereof involving
the Parties or their Subsidiaries may be extended in
accordance with the terms thereof; or (z) any agreement with a
labor union;
(viii) change its method of accounting in effect for
its Annual Financial Statements, except as required by changes
in laws or regulations or GAAP, or change any of its methods
of reporting income and deductions for federal income tax
purposes from those employed in the preparation of its federal
income tax return for such year, except as required by changes
in laws or regulations;
(ix) enter into or renew any lease of real or
personal property or any service agreement provided the
consent of the other Party shall not be unreasonably withheld
or delayed, or fail to give any required notice to prevent a
lease or service agreement from being renewed; or make any
capital expenditures in excess of $50,000 individually or
$100,000 in the aggregate (provided the consent of the other
Party shall not be unreasonably withheld or delayed), other
than pursuant to binding commitments Previously Disclosed and
existing on the date hereof and expenditures necessary to
maintain existing assets in good repair;
(x) file any applications or make any contract with
respect to branching or site location or relocation;
(xi) purchase any security or acquire in any manner
whatsoever (other than to realize upon collateral for a
defaulted loan) control over or any equity interest in any
business or entity, other than marketable securities (which do
not exceed 1% of the securities outstanding within such class)
in the ordinary course of business;
(xii) except with respect to real estate acquired in
foreclosure (or by deed in lieu thereof) or repossessed
assets, enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any of
its assets or rights or
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requiring the consent of any party to the transfer and
assignment of any such assets or rights;
(xiii) except as necessitated in its reasonable
opinion due to changes in interest rates, and in accordance
with safe and sound banking practices, change or modify in any
material respect any of its lending or investment policies,
except to the extent required by law or an applicable
regulatory authority;
(xiv) enter into any futures contract, option
contract, interest rate caps, interest rate floors, interest
rate exchange agreement or other agreement for purposes of
hedging the exposure of its interest-earning assets and
interest-bearing liabilities to changes in market rates of
interest provided the consent of the other Party shall not be
unreasonably withheld or delayed if the hedging activity is
undertaken consistent with past practices and prudent banking
practices;
(xv) take any action that would cause any of the
representations and warranties contained herein not to be true
and correct in any material respect at Closing or that would
cause any of the conditions of Article VII hereof not to be
satisfied;
(xvi) take any action that would materially impede or
delay the completion of the Transactions or the ability of
either Party to perform its covenants and agreements under
this Agreement;
(xvii) materially increase or decrease the rate of
interest paid on time deposits, or on certificates of deposit,
except in a manner and pursuant to policies consistent with
past practices; or
(xviii) agree to do any of the foregoing.
(b) Each Party shall promptly notify the other Party in
writing of the occurrence of any matter or event known to and directly
involving it or any of its Subsidiaries, other than any changes in
conditions that affect the banking or savings institution industry
generally, that would have, either individually or in the aggregate, a
Material Adverse Effect on it.
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6.7 Certain Actions
Neither Party nor any of its Subsidiaries or any of their respective
directors, officers, employees, representatives or agents shall solicit or
encourage inquiries or proposals with respect to, furnish any information
relating to, or participate in any negotiations or discussions concerning, any
Alternative Proposal, provided, however, that the Board of a Party may furnish
such information (but limited to the information provided to the other Party in
connection with or relating to this Agreement and the Transactions) or
participate in such negotiations or discussions if such Board, after having
consulted with and considered the advice of outside counsel, has determined that
the failure to do the same would, in the good faith opinion of such Board,
result in a breach of the fiduciary duty of the Board under applicable law. Each
Party will promptly inform the other Party orally and in writing of any such
request for information or of any negotiations or discussions, as well as
instruct its directors, officers, employees, representatives and agents and
those of its Subsidiaries to refrain from taking any action prohibited by this
Section.
6.8 Current Information
During the period from the date hereof to the Closing Date, each Party
shall, upon request of the other Party, cause one or more of its designated
representatives to confer on a monthly or more frequent basis with
representatives of the requesting Party regarding its and its Subsidiaries
financial condition, operations and businesses and matters relating to the
completion of the Transactions. As soon as reasonably available, but in no event
more than five business days after filing, each Party will Deliver all reports
filed by it under the Thrift Regulations concurrently with the filing of such
reports. Each Party will also Deliver as soon as practicable all Securities
Documents filed by it with the SEC subsequent to the date hereof.
6.9 Indemnification
(a) After the Effective Time, the Surviving Corporation shall
indemnify, defend and hold harmless each person who is now, or who has been at
any time before the date hereof or who becomes before the Effective Time, an
officer, director or employee of either Party or any of its respective
Subsidiaries (the "Indemnified Parties") against all losses, claims, damages,
costs, expenses (including attorney's fees), liabilities or
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judgments or amounts that are paid in settlement (which settlement shall require
the prior written consent of the Surviving Corporation, which consent shall not
be unreasonably withheld) of or in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, or administrative (each a
"Claim"), in which an Indemnified Party is, or is threatened to be made, a party
or a witness based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director, officer or employee of either
Party or any of its respective Subsidiaries if such Claim pertains to any matter
or fact arising, existing or occurring before the Effective Time (including,
without limitation, the Transactions, regardless of whether such Claim is
asserted or claimed before, or at or after, the Effective Time (the "Indemnified
Liabilities"), to the fullest extent permitted under applicable state or federal
law in effect as of the date hereof or as amended applicable to a time before
the Effective Time and under such Party's Charter or bylaws as in effect on the
date hereof (as the case may be). The Surviving Corporation shall pay expenses
in advance of the final disposition of any such action or proceeding to each
Indemnified Party to the full extent permitted by applicable state or federal
law in effect as of the date hereof or as amended applicable to a time before
the Effective Time upon receipt of any undertaking required by applicable law.
Any Indemnified Party wishing to claim indemnification under this Section
6.9(a), upon learning of any Claim, shall notify the Surviving Corporation (but
the failure so to notify the Surviving Corporation shall not relieve it from any
liability which it may have under this Section 6.9(a)except to the extent such
failure materially prejudices the Surviving Corporation) and shall deliver to
the Surviving Corporation any undertaking required by applicable law. The
Surviving Corporation shall ensure, to the extent permitted under applicable
law, that all limitations of liability existing in favor of the Indemnified
Parties as provided in a Party's Charter or bylaws(as the case may be), as in
effect as of the date hereof, or allowed under applicable state or federal law
as in effect as of the date hereof or as such law may be amended applicable to a
time before the Effective Time, with respect to Indemnified Liabilities shall
survive the consummation of the Transactions.
(b) From and after the Effective Time, the directors, officers and
employees of each Party hereto or any of its Subsidiaries who become directors,
officers or employees of the Surviving Corporation or any of its Subsidiaries,
shall have
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indemnification rights having prospective application with respect to acts or
omissions occurring after the Effective Time. The prospective indemnification
rights shall consist of such rights to which directors, officers and employees
of the Surviving Corporation and its Subsidiaries are entitled under the
provisions of the Charter and bylaws of the Surviving Corporation and its
Subsidiaries, as in effect from time to time after the Effective Time, as
applicable, and provisions of applicable state and federal law as in effect from
time to time after the Effective Time.
(c) For a period of six years from and after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by Cohoes
and its Subsidiaries (provided that the Surviving Corporation may substitute
therefor policies from a financially capable insurer of at least the same
coverage and amount containing terms and conditions which are substantially no
less advantageous, or in the event such coverage is provided through Hudson's
insurer it may be on terms and conditions (other than coverage and amounts)
consistent with Hudson's current coverage), or in lieu thereof single limit tail
coverage for such period, with respect to claims arising from facts or events
which occurred before the Effective Time. Following consummation of the Merger,
the directors and officers of the Surviving Corporation and its Subsidiaries
shall be covered by the directors' and officers' liability insurance maintained
by the Surviving Corporation and its Subsidiaries.
(d) The obligations of the Surviving Corporation provided under
paragraphs (a), (b) and (c) of this Section 6.9 are intended to be enforceable
against the Surviving Corporation directly by the Indemnified Parties and shall
be binding on all respective successors and permitted assigns of the Surviving
Corporation.
6.10 Environmental Reports
If requested by a Party within 15 days after the date hereof (or within
15 days after the acquisition or lease of any real property acquired or leased
after the date hereof), the other Party shall, as soon as reasonably
practicable, but not later than 30 days from the receipt of the request, Deliver
a report of a phase one environmental investigation on real property owned or
leased by it (but excluding space in office or retail and similar establishments
leased for automatic teller machines or bank
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branch facilities or other office uses where the space leased comprises less
than 20% of the total space leased to all tenants of such property). If required
by the phase one environmental investigation in the requesting Party's
reasonable opinion, the other Party shall Deliver, within 60 days of the receipt
of the request, a report of a phase two environmental investigation on
properties requiring such additional study. The requesting Party shall have ten
days from its receipt of the phase one environmental investigation to request a
phase two environmental investigation. The costs of any environmental
investigations shall be borne by the requesting Party.
6.11 Employees and Employee Benefit Plans
(a) Full time employees of Cohoes and its Subsidiaries who
remain employed after the Effective Time will be eligible to
participate in benefit plans of the Surviving Corporation and its
Subsidiaries that are generally available to their full-time employees
on a uniform and non-discriminatory basis in accordance with and
subject to the terms and provisions of such benefit plans, with credit
for years of service with Cohoes and its Subsidiaries for the purpose
of determining eligibility for participation, vesting and entitlement
to vacation time and sick pay (but not for the purpose of accrual or
restoration of benefits under any Hudson Employee Plan or any future
benefit plan of the Surviving Corporation or any of its Subsidiaries
where benefits are calculated on an actuarial basis, including any
qualified or non-qualified defined benefit plan or restoration plan).
Contributions to (and accrual of benefits, to the extent applicable, if
any, under) benefit plans of the Surviving Corporation and its
Subsidiaries on behalf of continuing full-time employees of Cohoes and
its Subsidiaries shall only relate to qualifying compensation earned by
such employees after the Effective Time subject to the terms and
provisions of such employee plans. Notwithstanding anything contained
above, continuing full time employees of Cohoes and its Subsidiaries
shall not be eligible to participate in the Hudson (Surviving
Corporation) ESOP until the plan year beginning April 1, 2001. The
Surviving Corporation shall use its best efforts to cause any and all
pre-existing condition limitations (to the extent such limitations did
not apply to a pre-existing condition under the corresponding Cohoes
group health plan) and eligibility waiting periods under its group
health plans
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to be waived with respect to such participants and their
eligible dependents.
(b) If the employment of any full-time employee of Cohoes,
Hudson or their respective Subsidiaries is involuntarily terminated
other than for Cause within six months following the Effective Time,
the Surviving Corporation or its applicable Subsidiary shall provide
severance benefits to such employee in a cash amount equal to such
employee's regular salary for a one-week period (as in effect
immediately prior to the Effective Time) multiplied by the total number
of whole years of such employee's full-time employment (up to a maximum
of thirteen years) at Cohoes, Hudson or any of their respective
Subsidiaries; provided, however that in no event shall the Surviving
Corporation or any of its applicable Subsidiaries have any obligation
to provide severance benefits to any such full-time employee whose
termination of employment occurs due to resignation or discharge for
Cause or who is entitled to severance benefits or the equivalent
thereof under the terms of any other compensation plan or individual
contract or the provisions of Section 6.11(c).
(c) The Surviving Corporation agrees to honor the terms of all
Previously Disclosed employment, consulting, severance and termination
agreements, severance plans, benefit restoration plans, stock option
plans, and recognition and retention plans to which Cohoes or Hudson or
any of their respective Subsidiaries is a party, other than those that
are being terminated and/or replaced at the Effective Time. Nothing
herein is intended to limit the right of the Surviving Corporation to
amend or terminate any of the foregoing in accordance with their terms.
The Surviving Corporation hereby expressly assumes at the Effective
Time every such agreement which by its terms requires express
assumption by a successor. Such express assumption shall occur by
virtue of Hudson's execution of this Agreement without any further
action required by the Surviving Corporation upon the completion of the
Merger. Each Cohoes employee who is currently a party to a change in
control severance agreement with Cohoes' savings bank Subsidiary and is
employed at the Effective Time shall be offered at such time the
opportunity to receive a new change in control severance agreement from
the Surviving Corporation in replacement thereof in the same form and
with the same benefits contained in the change in control
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severance agreements currently in effect at Hudson in consideration of
such employee waiving, relinquishing and releasing all of his rights
under his existing change in control severance agreement with Cohoes'
savings bank Subsidiary unless his employment with the Resulting
Institution is involuntarily terminated without cause by the Resulting
Institution within one year after the Effective Time, in which case
such employee shall remain entitled to receive the severance and other
benefits contained in his or her current change in control severance
agreement with Cohoes' savings bank Subsidiary. Any employee of Hudson
or its savings bank Subsidiary who currently has a change in control
severance agreement with Hudson shall, if his or her employment is
involuntarily terminated by the Surviving Corporation or the Resulting
Institution without cause within one year after the Effective Time, be
entitled to receive benefits equal to one year's base salary in lump
sum on the date of employment termination plus continuing health
insurance coverage(including spousal and dependant coverage) under the
Surviving Corporation's group health insurance plan during the one year
period after the date of employment termination with all premiums being
paid by the Surviving Corporation.
(d) In the sole discretion of the Surviving Corporation,
payments made by it or its Subsidiaries in full and complete
satisfaction of obligations of Cohoes or its Subsidiaries under any
Cohoes Employee Plan, or severance under Section 6.11(b) or under any
agreement or arrangement referred to in Section 6.11(c) shall be
subject to the recipient's delivery to the Surviving Corporation of (i)
a written acknowledgment signed by such recipient that the payment or
payments and benefits to be made to him or her is in full and complete
satisfaction of all liabilities and obligations thereunder of Cohoes,
the Surviving Corporation, and each of their respective Subsidiaries,
affiliates, directors, officers, employees and agents, and (ii) a
release by such recipient of all such parties from further liability in
connection with the particular Cohoes Employee Plan, the recipients'
employment, agreement or arrangement, as applicable.
(e) Prior to the Closing, Cohoes shall make appropriate
amendments to the Cohoes ESOP, to the extent permitted by law, to
permit the Surviving Corporation Common Stock received by the Cohoes
ESOP in the Merger to be tendered to
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the Surviving Corporation for redemption and/or cancellation against
payment and retirement of the Cohoes ESOP loan by the Surviving
Corporation(in the same manner as if such shares of Surviving
Corporation Common Stock received in the Merger by the Cohoes ESOP were
sold by it in the open market with the cash proceeds therefrom being
utilized to retire the Cohoes ESOP loan). At the Effective Time, the
Cohoes ESOP shall terminate in accordance with its terms based upon the
Merger constituting a change in control termination therein and the
Surviving Corporation shall not take any action to preclude such
termination. Moreover, the Parties shall make all filings with
Governmental Entities relating to the termination of the Cohoes ESOP to
facilitate the repayment of the ESOP loan and the distribution of
benefits to participants thereunder, if any, at the earliest
practicable time after the Effective Time.
(f) At any time on or after the Effective Time as determined
by the Surviving Corporation, the Cohoes 401(k) Plan shall be merged
into the Hudson 401(k) Plan, with the Hudson 401(k) Plan being the
surviving plan, all in accordance with applicable law, provided the
Parties understand and agree that there is no intention on their part
for the profit sharing plan portion of the Cohoes 401(k) Plan to be
continued in the surviving plan. Cohoes shall take all actions
requested by Hudson in order to accomplish the merger of the Cohoes
401(k) Plan into the Hudson 401(k) Plan. The Surviving Corporation may
at any time after the Effective Time modify the Cohoes 401(k) Plan or
the merged 401(k) Plans, as the Surviving Corporation in its sole
discretion determines necessary or appropriate to accomplish the
merger, and to facilitate the ongoing operation of the merged 401(k)
Plan, subject to compliance with applicable law.
(g) Cohoes shall, at the request of Hudson terminate the
profit sharing plan portion of the Cohoes 401(k) Plan at or prior to
the Closing.
(h) The Surviving Corporation shall, as of the Effective Time,
grant stock options and restricted stock awards to directors (including
the emeritus director) and two executive officers of Cohoes as
Previously Disclosed by Hudson.
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(i) Each person who is a director of Cohoes, Hudson or its
respective savings bank Subsidiary, immediately prior to the Effective
Time, who does not become an initial director of either the Surviving
Corporation or the Resulting Institution at the Effective Time,
together with Charles Crotty (if he is an emeritus director of Cohoes
immediately prior to the Effective Time) and, at the election of Hudson
prior to Closing each of its emeritus directors (if such director is an
emeritus director of Hudson immediately prior to the Effective Time and
no alternative arrangements have been made by Hudson with such
director),shall be entitled to become an emeritus director of the
Surviving Corporation at the Effective Time as Previously Disclosed by
Hudson. Subsequent to the Effective Time, each of Carl A. Florio and
Harry L. Robinson shall be entitled to become an emeritus director of
the Surviving Corporation as Previously Disclosed by Hudson.
(j) Prior to the Closing, the Board of Hudson shall approve by
at least a 75% vote the directors named by the Cohoes Board pursuant to
Section 2.2(b)(i) hereof so as to ensure that completion of the
Transactions does not result in a change in control under Hudson's
change in control severance agreements.
6.12 Bank Merger and Resulting Institution
The Parties and their respective savings bank Subsidiaries shall take
all necessary and appropriate actions to make it possible for the Bank Merger to
be authorized, agreed to, and accomplished immediately after the Effective Time,
or at such other time thereafter as may be determined by the Surviving
Corporation. In connection with the Bank Merger, the Surviving Corporation shall
cause the following to occur:
(a) the name of the Resulting Institution shall continue as
"Hudson River Bank & Trust Company";
(b) the Resulting Institution shall have 12 directors or such
other equal number as is agreed to by the Parties in writing at or
prior to the Closing. The directors of the Resulting Institution shall
be selected by the directors of the Surviving Corporation. Those
directors of the Surviving Corporation designated by pre-Merger
resolutions of each Party shall, by majority action of such individuals
and subject to their fiduciary duties, designate one half of the
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directors of the Resulting Institution according to the
following procedure:
(i) Harry L. Robinson and Duncan MacAffer shall be
designated by Cohoes to be directors of the Resulting
Institution, and Carl A. Florio and Earl Schram, Jr.
shall be designated by Hudson to be directors of the
Resulting Institution;
(ii) the remaining directors of the Resulting
Institution shall be chosen equally from the Boards of Cohoes
and Hudson, with preference given to those directors who are
not named as directors of the Surviving Corporation pursuant
to Section 2.2(b)(i) hereof and who do not elect emeritus
director status under Section 6.11(i); and
(iii) Messrs. MacAffer and Schram shall be
Co-Chairmen of the Board of the Resulting Institution.
(c) For the period set forth in Section 2.2(b)(y) hereof, the
Board of the Surviving Corporation, to the extent consistent with its
fiduciary duties, shall elect all incumbent directors of the Resulting
Institution to additional terms. If an incumbent director designated on
behalf of a Party is not re-elected or declines to stand for
re-election, then the directors of the Surviving Corporation installed
by such Party (inclusive of any of their successors in office) shall
nominate the candidate to be elected in place of such incumbent
director and the Board of Directors of the Surviving Corporation, to
the extent consistent with its fiduciary duties, shall cause such
candidate to be elected as a director of the Resulting Institution. If
the Board of the Surviving Corporation does not cause such candidate to
be elected, then the remaining directors of the Surviving Corporation
designated by that Party (including any of their successors in office)
shall choose another candidate until the Board of the Surviving
Corporation causes such candidate to be elected as a director of the
Resulting Institution.
(d) Any vacancy among the directors of the Resulting
Institution elected on behalf of a Party pursuant to Section 6.12(b) or
(c) shall be filled by majority action of those remaining directors of
the Resulting Institution who were elected on behalf of such Party.
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(e) The initial officers of the Resulting Institution
shall be:
Vice Chairman and Chief Executive Harry L. Robinson
Officer
Vice Chairman and President Carl A. Florio
CFO Timothy E. Blow
COO and Executive Vice President Richard A. Ahl
Senior Lending Officer and Executive Sidney D. Richter
Vice President
6.13 Litigation Matters
Each Party will consult with the other about any proposed settlement,
or any disposition of, any litigation.
6.14 Conforming Entries
(a) Cohoes recognizes that Hudson and its Subsidiaries may
have adopted different loan, accrual and reserve policies (including
loan classifications and levels of reserves for possible loan losses).
Subject to applicable law, from and after the date hereof to the
Closing, Cohoes and Hudson shall consult and cooperate with each other
with respect to conforming the loan, accrual and reserve policies of
Cohoes and its Subsidiaries to those policies of Hudson and its
Subsidiaries, as specified in each case in writing from Hudson to
Cohoes, based upon such consultation and subject to the conditions in
Section 6.14(c) below.
(b) Subject to applicable law, Cohoes and Hudson shall consult
and cooperate with each other with respect to determining, as specified
in a written notice from Hudson to Cohoes, based upon such consultation
and subject to the conditions in Section 6.14(c) below, the amount and
the timing for recognizing for financial accounting purposes Cohoes'
expenses of the Transactions and the restructuring charges relating to
or to be incurred in connection with the Transactions.
(c) Subject to applicable law, Cohoes and its Subsidiaries
shall (i) establish and take such reserves and accruals at such time as
Hudson shall reasonably request to conform the loan, accrual and
reserve policies of Cohoes and its Subsidiaries to the policies of
Hudson and its
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Subsidiaries, and (ii) establish and take such accruals, reserves and
charges in order to implement such policies and to recognize for
financial accounting purposes such expenses of the Transactions and
restructuring charges related to or to be incurred in connection with
the Transactions, in each case at such times as are reasonably
requested by Hudson, but in no event prior to five days before the
Closing Date; provided, however, that on the date such reserves,
accruals and charges are to be taken, Hudson shall certify to Cohoes
that all conditions to Hudson's obligation to consummate the Merger set
forth in Sections 7.1 and 7.3 hereof (other than the delivery of
certificates, opinions and other instruments and documents to be
delivered at the Closing by Cohoes, the delivery of which shall
continue to be conditions to Hudson's obligation to consummate the
Merger) have been satisfied or waived; and provided, further, that
Cohoes and its Subsidiaries shall not be required to take any such
action that is not consistent with GAAP and regulatory accounting
principles.
(d) No reserves, accruals or charges taken in accordance with
this Section may be a basis to assert a violation of a breach of a
representation, warranty or covenant of Cohoes herein.
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6.15 INTENTIONALLY OMITTED
6.16 Disclosure Supplements
From time to time prior to the Closing, each Party shall promptly
supplement or amend any materials Previously Disclosed or Delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in materials Previously Disclosed or Delivered or which
is necessary to correct any information in such materials which has been
rendered materially inaccurate thereby. No such supplement or amendment to such
materials shall be deemed to have modified the representations, warranties and
covenants of the disclosing Party for the purpose of determining whether the
conditions set forth in Article VII hereof have been satisfied.
6.17 Failure to Fulfill Conditions
If a Party determines that a condition to its obligations to consummate
the Merger may not be fulfilled, it will promptly notify the other Party. Each
Party will promptly inform the other Party of any facts applicable to it that
would be likely to prevent or materially delay approval of any of the
Transactions by any Governmental Entity or third party or which would otherwise
prevent or materially delay completion of any of the Transactions.
6.18 Proxy Solicitor
Each Party may, and if requested by the other Party shall, retain a
proxy solicitor in connection with its meeting of shareholders held to vote on
its Proposal.
6.19 Surviving Corporation Common Stock
Hudson shall reserve for issuance a sufficient number of shares of its
Common Stock for the purpose of issuing the Merger Consideration to Cohoes'
shareholders. Hudson covenants that the Surviving Corporation Common Stock to be
issued in the Merger will be duly authorized, validly issued, fully paid and
nonassessable and not subject to any preemptive rights or other Encumbrance.
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6.20 Prospectus/Joint Proxy Statement
(a) The Parties shall promptly cooperate with each other in the
preparation and filing of the Registration Statement with the SEC and after the
SEC has cleared the Registration Statement, each shall promptly mail the Proxy
Statement to its shareholders.
(b) Each Party covenants that at the time the Proxy Statement is mailed
to shareholders of the Parties, and at all times after such mailings up to and
including the final required approval of shareholders of the Parties, such Proxy
Statement (including any supplements thereto), with respect to all information
set forth therein relating to it, its Subsidiaries, its shareholders, its Common
Stock, this Agreement, and the Transactions will:
(i) comply in all material respects with applicable provisions
of the Securities Act, the Exchange Act and the rules and regulations
under such Acts; and
(ii) not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements contained therein, in light
of the circumstances under which they are made, not misleading.
6.21 Tax Opinion
Each Party agrees to use reasonable efforts to obtain a written tax
opinion of counsel, dated as of the Closing, in order to satisfy the condition
set forth in Section 7.1(f).
6.22 Reservation of Shares to Satisfy Cohoes Continuing Options
Hudson or the Surviving Corporation shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Surviving
Corporation Common Stock for delivery upon exercise of those Cohoes Options that
have been converted to a right to acquire Surviving Corporation Common Stock
pursuant to Section 2.7. As soon as practicable after the Effective Time, the
Surviving Corporation shall file an appropriate registration statement with
respect to the shares of Surviving Corporation Common Stock subject to Cohoes
Options that have been converted to a right to acquire Surviving Corporation
Common Stock pursuant to Section 2.7 and shall use its reasonable best efforts
to maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the
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prospectus or prospectuses contained therein) for so long as such
options remain outstanding.
6.23 Listing
Hudson shall use all reasonable efforts to cause the shares of
Surviving Corporation Common Stock to be issued in the Merger, and the shares of
Surviving Corporation Common Stock to be reserved for issuance pursuant to
Section 6.22, to be approved for listing on the Nasdaq National Market, subject
to official notice of issuance, prior to or as of the Closing.
6.24 New Affiliates
Cohoes shall use its best efforts to cause any person becoming an
affiliate of Cohoes for purposes of Rule 145 of the Securities Act after the
date hereof to enter into an affiliate agreement in the form attached hereto as
Exhibit E.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions Precedent - the Parties
The respective obligations of both Parties to effect the Merger shall
be subject to the satisfaction of the following conditions at or prior to the
Closing unless waived by the Parties to the extent permitted by Section 8.4.
(a) The shareholders of each Party shall have approved its
Proposal including in the case of Hudson, each part of its Proposal.
(b) All approvals and consents from any Governmental Entity,
the approval or consent of which is required for the completion of the
Transactions, shall have been received and all statutory waiting
periods in respect thereof shall have expired; and the Parties shall
have procured all other approvals, consents and waivers of each person
(other than the Governmental Entities referred to above) whose
approval, consent or waiver is necessary to the completion of the
Transactions; provided, however, that no approval or consent referred
to in this Section 7.1(b) shall be deemed to have been received if it
shall include any condition or requirement that, in the aggregate,
would materially reduce the economic or business benefits of the
Transactions to the
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Surviving Corporation as the Parties shall reasonably and in good faith
agree.
(c) Neither Party nor its savings bank Subsidiary shall be
subject to any statute, rule, regulation, injunction or other order or
decree which shall have been enacted, entered, promulgated or enforced
by any Governmental Entity which prohibits, restricts or makes illegal
completion of any of the Transactions.
(d) No proceeding initiated by any Government Entity seeking
an order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition
preventing the completion of any of the Transactions shall be pending
or threatened.
(e) The Registration Statement shall have been declared
effective and shall not be subject to a stop order of the SEC (and no
proceedings for that purpose shall have been initiated or threatened by
the SEC) and, if the offer and sale of the Surviving Corporation Common
Stock in the Merger pursuant to this Agreement is subject to the
securities laws of any state, shall not be subject to a stop order of
any state securities authority.
(f) Each Party shall have received an opinion of its tax
counsel, dated as of the Closing, to the effect that for federal income
tax purposes:
(i) The Transactions will qualify as
"reorganizations" under Section 368(a) of the Code.
(ii) No gain or loss will be recognized by
any Party or any of its savings bank Subsidiaries by reason of
the consummation of the Transactions.
(iii) No gain or loss will be recognized by
any shareholder of Cohoes upon the exchange of Cohoes Common
Stock solely for Surviving Corporation Common
stock in the Merger.
(iv) The basis of the Surviving Corporation
Common Stock received by each shareholder of Cohoes who
exchanges Cohoes Common Stock for Surviving Corporation Common
Stock in the Merger will be the same as the basis of the
Cohoes Common Stock surrendered in exchange therefor (subject
to any adjustments required
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as the result of receipt of cash in lieu of a
fractional share of Surviving Corporation Common
Stock).
(v) The holding period of the Surviving
Corporation Common Stock received by a shareholder of Cohoes
in the Merger will include the holding period of the Cohoes
Common Stock surrendered in exchange therefor, provided that
such shares of Cohoes Common Stock were held as a capital
asset by such shareholder at the Effective Time.
(vi) Cash received by a Cohoes shareholder
in lieu of a fractional share interest of Surviving
Corporation Common Stock which such shareholder would
otherwise be entitled to receive (or the deemed issuance of a
fractional share interest by the Surviving Corporation and
deemed redemption thereof by it) will qualify as capital gain
or loss (assuming the Cohoes Common Stock was a capital asset
in such shareholder's hands at the Effective Time).
(g) The shares of Surviving Corporation Common Stock to be
issued in the Merger shall have been approved for listing on the Nasdaq
National Market, subject to official notice of issuance.
7.2 Conditions Precedent - Cohoes
The obligations of Cohoes to effect the Merger shall be subject to
satisfaction of the following conditions at or prior to the Closing unless
waived by Cohoes to the extent permitted by Section 8.4.
(a) Between the date hereof and the Closing, Hudson and/or its
Subsidiaries shall not have been affected by any event or change which
has had or caused a Material Adverse Effect on Hudson.
(b) The representations and warranties of Hudson made herein
shall be true and correct as of the date hereof and (other than the
representations and warranties in Section 3.1 with respect to the
effects of any exercise of Rights or vesting of Restricted Stock and in
Section 3.6) as of the Closing as though made anew at the Closing (as
if the Closing Date was the date hereof for such purpose), in each case
as to the representations and warranties of Hudson
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under Article IV subject to the standard set forth in
Section 9.8.
(c) Hudson shall have performed in all material respects all
obligations and complied in all material respects with all covenants
and agreements required to be performed and complied with by it
pursuant to this Agreement on or prior to the Closing.
(d) Hudson shall have delivered to Cohoes a certificate, dated
the Closing Date and signed by its Chief Executive Officer and by its
Chief Financial Officer, to the effect that the conditions set forth in
Sections 7.2(a) through 7.2(c) have been satisfied.
(e) Hudson shall have furnished Cohoes with such certificates
of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 7.1 and 7.2 as such
conditions relate to Hudson and its Subsidiaries as Cohoes may
reasonably request.
7.3 Conditions Precedent - Hudson
The obligations of Hudson to effect the Merger shall be subject to
satisfaction of the following conditions at or prior to the Closing unless
waived by Hudson to the extent permitted by Section 8.4.
(a) Between the date hereof and the Closing, Cohoes and/or its
Subsidiaries shall not have been affected by any event or change which
has had or caused a Material Adverse Effect on Cohoes.
(b) The representations and warranties of Cohoes set forth
herein shall be true and correct as of the date hereof and (other than
the representations and warranties in Section 3.1 with respect to the
effects of any exercise of Rights or vesting of Restricted Stock and in
Section 3.6) as of the Closing as though made anew at the Closing (as
if the Closing Date was the date hereof for such purpose), in each case
as to the representations and warranties of Cohoes under Article IV
subject to the standard set forth in Section 9.8.
(c) Cohoes shall have performed in all material respects all
obligations and complied in all material
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respects with all covenants and agreements required to be performed and
complied with by it pursuant to this Agreement on or prior to the
Closing.
(d) Cohoes shall have delivered to Hudson a certificate, dated
the Closing Date and signed by its Chief Executive Officer and by its
Chief Financial Officer, to the effect that the conditions set forth in
Sections 7.3(a) through 7.3(c) have been satisfied.
(e) Cohoes shall have furnished Hudson with such certificates
of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 7.1 and 7.3 as such
conditions relate to Cohoes and its Subsidiaries as Hudson may
reasonably request.
(f) Each affiliate of Cohoes for purposes of Rule 145 of the
Securities Act shall have entered into an affiliate agreement in the
form attached hereto as Exhibit E.
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT
AND SPECIFIC PERFORMANCE
8.1 Termination
This Agreement may be terminated by a written instrument prior to the
Effective Time:
(a) by the mutual consent of the Parties;
(b) by the non-breaching Party if the other Party has breached
in any material respect any of its covenants, agreements or
representations and warranties (but in the case of representations and
warranties under Article IV subject to the standard set forth in
Section 9.8) herein, and such breach has not been cured within 30 days
after written notice;
(c) by either Party, (i) if any Governmental Entity of
competent jurisdiction shall have issued a final nonappealable order
prohibiting the completion of the Merger; or (ii) if application for
any necessary prior approval of a Governmental Entity is denied or
withdrawn at the request or recommendation of the Governmental Entity,
provided that such denial or request or recommendation for
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withdrawal is not due to the terminating Party's breach of
any provision of this Agreement;
(d) By either Party if the shareholders of either Party do not
approve the Cohoes Proposal or the Hudson Proposal (including each part
thereof), as applicable; and
(e) by either Party if the Effective Time has not occurred by
the close of business on February 28, 2001, provided that the
terminating Party is not then in breach of any of its covenants,
agreements or representations and warranties (but in the case of
representations and warranties under Article IV subject to the standard
set forth in Section 9.8) herein.
8.2 Effect of Termination
In the event that this Agreement is terminated it shall become void and
have no effect, except for:
(a) the provisions relating to confidentiality set
forth in Section 6.4,
(b) the provision relating to press releases set forth in
Section 6.5,
(c) the provision relating to expenses set forth in Section
9.1, and
(d) a termination pursuant to Section 8.1(b) shall not relieve
the breaching Party from any liability or damages if such termination
arises out of its willful breach of any provision of this Agreement; in
such event the non-breaching Party shall be entitled to such monetary
remedies and relief against the breaching Party as are available at
law; provided, however, that the non-breaching Party may only collect
monetary damages against the breaching Party if it shall (i) not have
exercised any rights under the stock option agreement executed by the
Parties for benefit of the non-breaching Party in the form of Exhibit A
or B hereto, whichever is applicable, and (ii) cancel and surrender
such stock option agreement to the breaching Party against payment of
such damages.
8.3 Survival of Representations, Warranties and Covenants
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All representations, warranties, agreements and covenants in this
Agreement or in any other document or instrument delivered pursuant hereto or in
connection herewith shall expire on, and be terminated and extinguished at, the
Effective Time other than agreements or covenants contained herein or therein
that by their terms are to be performed after the Effective Time. No such
representations, warranties, agreements or covenants shall be deemed to be
terminated or extinguished so as to deprive the Surviving Corporation or any
affiliate of a Party of any defense at law or in equity which otherwise would be
available against the claims of any person, including any shareholder or former
shareholder.
8.4 Waiver
Each Party hereto by written instrument approved by its Board and
signed by an executive officer of such Party, may at any time (whether before or
after approval of this Agreement by the Parties' shareholders) extend the time
for the performance of any of the obligations or other acts of the other Party
hereto and may waive (i) any inaccuracies of the other Party in the
representations or warranties contained in this Agreement or any document
delivered pursuant hereto, (ii) compliance with any of the covenants,
undertakings or agreements of the other Party, (iii) to the extent permitted by
law, satisfaction of any of the conditions precedent to its obligations
contained herein or (iv) the performance by the other Party of any of its
obligations set forth herein.
8.5 Amendment or Supplement
This Agreement may be amended at any time by mutual written agreement
of the Parties approved by their Boards and signed by an executive officer of
each Party, provided that any such amendment after the shareholders of the
Parties have approved this Agreement shall not modify either the amount or form
of the Merger Consideration or otherwise materially adversely affect such
shareholders without the approval of the shareholders to the extent required by
applicable law.
8.6 Specific Performance
The Parties acknowledge and agree that the Transactions contemplated
herein are unique and that any remedy at law for breach is inadequate to
compensate the aggrieved Party. Accordingly, each Party shall have the right to
seek specific performance of this Agreement and the other Party's duties,
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obligations, covenants and agreements herein in order to cause the Transactions
to be consummated. To this end, each Party, to the extent permitted by law,
irrevocably waives any defense it might have based on the adequacy of a remedy
at law which might be asserted as a bar to specific performance or any other
equitable relief.
ARTICLE IX
MISCELLANEOUS
9.1 Expenses
Except as otherwise provided below, each Party hereto shall bear and
pay all costs and expenses incurred by it in connection with this Agreement and
the Transactions, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel. The Parties shall equally share all
printing costs, mailing costs and filing fees for the Registration Statement and
the Proxy Statement.
9.2 Entire Agreement
This Agreement together with any other documents or instruments
executed by the Parties relating to the subject matter hereto concurrently with
or on the same day as the execution of this Agreement contains the entire
agreement among the Parties with respect to the Transactions and supersedes all
prior arrangements or understandings with respect thereto, written or oral,
other than documents referred to herein which are to be executed after the date
hereof. The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the Parties hereto and their respective successors. Nothing
in this Agreement, expressed or implied, is intended to confer upon any person,
other than the Parties, and their respective successors, any rights, remedies,
obligations or liabilities other than as set forth in Article II and in Sections
6.9, 6.11 and 6.12 hereof.
9.3 No Assignment
None of the Parties hereto may assign any of its rights or obligations
under this Agreement to any other person.
9.4 Notices
All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if
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delivered personally, telecopied (with confirmation) or sent by overnight mail
service or by registered or certified mail (return receipt requested), postage
prepaid, addressed as follows:
If to Cohoes:
Cohoes Bancorp, Inc.
75 Remsen Street
Cohoes, New York 12047
Attention: Harry L. Robinson
President and Chief Executive Officer
With a required copy to:
Elias, Matz, Tiernan & Herrick, L.L.P.
734 15th Street, N.W.
Washington, DC 20005
Attn: Raymond A. Tiernan, Esq.
Gerald F. Heupel, Jr., Esq.
If to Hudson:
Hudson River Bancorp, Inc.
One Hudson City Center
Hudson, New York 12534
Attention: Carl A. Florio
President and Chief Executive Officer
With a required copy to:
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W., 7th Floor East
Washington, D.C. 20005
Attn: Robert L. Freedman, P.C.
9.5 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
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9.6 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to agreements made and entirely to
be performed within such jurisdiction. The Parties hereby designate Wilmington,
Delaware to be the proper jurisdiction and venue for any suit or action arising
out of this Agreement.
9.7 Severability
Any term, provision, covenant or restriction contained in this
Agreement held to be invalid, void or unenforceable, shall be ineffective to the
extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this
Agreement nor the validity or enforceability thereof in any other jurisdiction
shall be affected or impaired thereby. Any term, provision, covenant or
restriction contained in this Agreement that is so found to be so broad as to be
unenforceable shall be interpreted to be as broad as is enforceable.
9.8 Standard of Breach
None of the representations or warranties contained in Article IV shall
be deemed untrue or incorrect, and no Party shall be deemed to have breached its
representations or warranties therein as a consequence of the existence of any
fact, circumstance or event, which would not, either individually or taken
together with all other facts, circumstances or events, have a Material Adverse
Effect on any Party.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized officers and attested by their officers
thereunto duly authorized, all as of the day and year first above written.
COHOES BANCORP, INC.
Attest:
By:
Name: Richard A. Ahl Name: Harry L. Robinson
--------------------------- --------------------------
Title: Secretary Title: President
HUDSON RIVER BANCORP, INC.
Attest:
By:
Name: Holly Rappleyea Name: Carl A. Florio
--------------------------- --------------------------
Title: Secretary Title: President
<PAGE>
APPENDIX B
_________________, 2000
Board of Directors
Hudson River Bancorp, Inc.
One Hudson City Centre
Hudson, NY 12534
Ladies and Gentlemen:
Hudson River Bancorp, Inc. ("Hudson River") and Cohoes Bancorp, Inc.
("Cohoes") have entered into an Agreement and Plan of Merger, dated as of April
25, 2000 (the "Agreement"), pursuant to which Cohoes will be merged with and
into Hudson River (the "Merger"). Under the terms of the Agreement, upon
consummation of the Merger, each share of Cohoes common stock, par value $.01
per share, issued and outstanding immediately prior to the effective time of the
Merger (the "Cohoes Shares"), other than certain shares specified in the
Agreement, will be converted into the right to receive 1.185 shares (the
"Exchange Ratio") of Hudson River common stock, par value $.01 per share. The
terms and conditions of the Merger are more fully set forth in the Agreement.
You have requested our opinion as to the fairness, from a financial point of
view, of the Exchange Ratio to the holders of shares of Hudson River common
stock.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement and exhibits thereto; (ii) the Stock Option
Agreements, dated as of April 25, 2000, by and between Hudson River and Cohoes;
(iii) certain publicly available financial statements and other historical
financial information of Hudson River that we deemed relevant; (iv) certain
publicly available financial statements and other historical financial
information of Cohoes that we deemed relevant; (v)consensus earnings per share
estimates for Hudson River published by IBES for the year ending December 31,
2000 and certain internal financial analyses and forecasts of Hudson River
prepared by and/or reviewed with management of Hudson River and the views of
senior management of Hudson River, based on certain limited discussions with
certain members of senior management, regarding Hudson River's business,
financial condition, results of operations and future prospects; (vi) consensus
earnings per share estimates for Cohoes published by IBES for the year ending
December 31, 2000 and certain financial analyses and forecasts of Cohoes
prepared by and/or reviewed with management of Cohoes and the views of senior
management of Cohoes, based on certain limited discussions with certain members
of senior management, regarding Cohoes' business, financial condition, results
of operations and future prospects; (vii) the pro forma impact of the Merger on
Hudson River; (viii) the publicly reported historical price and trading activity
for Hudson River's and Cohoes' common stock, including a
<PAGE>
Board of Directors
Hudson River Bancorp, Inc.
_________________, 2000
Page 2
comparison of certain financial and stock market information for Hudson River
and Cohoes with similar publicly available information for certain other
companies the securities of which are publicly traded; (ix) the financial terms
of recent business combinations in the savings institution industry, to the
extent publicly available; (x) the current market environment generally and the
banking environment in particular; and (xi) such other information, financial
studies, analyses and investigations and financial, economic and market criteria
as we considered relevant.
In performing our review, we have relied upon the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by Hudson River or Cohoes or
their respective representatives or that was otherwise reviewed by us and have
assumed such accuracy and completeness for purposes of rendering this opinion.
We have not been asked to and have not undertaken an independent verification of
any of such information and we do not assume any responsibility or liability for
the accuracy or completeness thereof. We did not make an independent evaluation
or appraisal of the specific assets, the collateral securing assets or the
liabilities (contingent or otherwise) of Hudson River or Cohoes or any of their
subsidiaries, or the collectibility of any such assets, nor have we been
furnished with any such evaluations or appraisals. We did not make an
independent evaluation of the adequacy of the allowance for loan losses of
Hudson River or Cohoes nor have we reviewed any individual credit files relating
to Hudson River or Cohoes and, with your permission, we have assumed that the
respective allowances for loan losses for both Hudson River and Cohoes are
adequate to cover such losses and will be adequate on a pro forma basis for the
combined entity. We are not accountants and have relied upon the reports of
independent accountants for the accuracy and completeness of the financial
statements made available to us. With respect to the financial projections
prepared by and reviewed with management, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the respective managements of the respective future financial
performances of Hudson River and Cohoes and that such performances will be
achieved, and we express no opinion as to such financial projections or the
assumptions on which they are based. We have also assumed that there has been no
material change in Hudson River's or Cohoes' assets, financial condition,
results of operations, business or prospects since the date of the most recent
financial statements made available to us. We have assumed in all respects
material to our analysis that Hudson River and Cohoes will remain as going
concerns for all periods relevant to our analyses, that all of the
representations and warranties contained in the Agreement and all related
agreements are true and correct, that each party to such agreements will perform
all of the covenants required to be performed by such party under such
agreements, that the conditions precedent in the Agreement are not waived and
that the Merger will be accounted for using the purchase method and will qualify
as a tax-free reorganization for federal income tax purposes.
Our opinion is necessarily based on financial, economic, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. Events occurring after the
<PAGE>
Board of Directors
Hudson River Bancorp, Inc.
_________________, 2000
Page 3
date hereof could materially affect this opinion. We have not undertaken to
update, revise, reaffirm or withdraw this opinion or otherwise comment upon
events occurring after the date hereof. We are expressing no opinion herein as
to what the value of Hudson River's common stock will be when issued to Cohoes'
shareholders pursuant to the Agreement or the prices at which Hudson River's or
Cohoes' common stock will trade at any time.
We have acted as Hudson River's financial advisor in connection with
the Merger and will receive a fee for our services, a significant portion of
which is contingent upon consummation of the Merger. We have also received a fee
for rendering this opinion. In the past, we have also provided, and expect to
continue to provide, certain other investment banking services for Hudson River
and have received, and expect to receive, compensation for such services. In the
ordinary course of our business as a broker-dealer, we may purchase securities
from and sell securities to Hudson River and Cohoes. We may also actively trade
the debt and equity securities of Hudson River and Cohoes for our own account
and for the accounts of our customers and, accordingly, may at any time hold a
long or short position in such securities.
Our opinion is directed to the Board of Directors of Hudson River in
connection with its consideration of the Merger and does not constitute a
recommendation to any shareholder of Hudson River as to how such shareholder
should vote at any meeting of shareholders called to consider and vote upon the
Merger. Our opinion is not to be quoted or referred to, in whole or in part, in
a registration statement, prospectus, proxy statement or in any other document,
nor shall this opinion be used for any other purposes, without Sandler O'Neill's
prior written consent; provided, however, that we hereby consent to the
inclusion of this opinion as an appendix to Hudson River's and Cohoes' Joint
Proxy Statement/Prospectus dated the date hereof and to the references to this
opinion therein.
Based upon and subject to the foregoing, it is our opinion, as of the
date hereof, that the Exchange Ratio is fair, from a financial point of view, to
the holders of shares of Hudson River common stock.
Very truly yours,
<PAGE>
APPENDIX C
[LETTERHEAD OF KEEFE, BRUYETTE & WOODS, INC.]
April 25, 2000
Board of Directors
Cohoes Bancorp, Inc.
75 Remsen Street
Cohoes, New York 12047
Dear Gentlemen:
You have requested our opinion as an independent investment banking firm
regarding the fairness, from a financial point of view, to the stockholders of
Cohoes Bancorp, Inc. ("Cohoes" or the "Company"), of the consideration to be
received by such stockholders in the merger (the "Merger") between the Company
and Hudson River Bancorp, Inc. ("Hudson River"). We have not been requested to
opine as to, and our opinion does not in any manner address, the Company's
underlying business decision to proceed with or effect the Merger.
Pursuant to the Agreement and Plan of Merger, dated April 25, 2000, by and among
the Company and Hudson River (the "Agreement"), at the effective time of the
Merger, Hudson River will acquire all of the Company's issued and outstanding
shares of common stock. The holders of the Company's common stock will receive
in exchange for each share of Company common stock, shares of Hudson River
common stock based on an exchange ratio of 1.185 shares of Hudson River common
stock for each share of Cohoes common stock.
In addition, subject to approval of items 3 and 4, options awarded pursuant to
the Section 6.11 (h) will receive merger consideration as described in such
section of the Agreement. The complete terms of the proposed transaction are
described in the Agreement, and this summary is qualified in its entirety by
reference thereto.
Keefe, Bruyette & Woods, Inc., as part of its investment banking business, is
regularly engaged in the evaluation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, and distributions of
listed and unlisted securities. We are familiar with the market for common
stocks of publicly traded banks, savings institutions and bank and savings
institution holding companies.
In connection with this opinion we reviewed certain financial and other business
data supplied to us by the Company including (i) the Agreement and Plan of
Merger by and among Hudson River, Hudson River Bank & Trust Company, Cohoes, and
Cohoes Savings Bank (ii) Annual Reports, Proxy Statements and Form 10-Ks for the
years ended June 30, 1997, 1998 and 1999, (iii) Form 10-Q for the quarters ended
<PAGE>
Board of Directors
Cohoes Bancorp, Inc.
April 25, 2000
Page 2
September 30, 1999 and December 31, 1999 and other information we deemed
relevant. We discussed with senior management and the boards of directors of the
Company and its wholly owned subsidiary, Cohoes Savings Bank, the current
position and prospective outlook for the Company. We considered historical
quotations and the prices of recorded transactions in the Company's common stock
since its initial public offering. We reviewed financial and stock market data
of other savings institutions, particularly in the north-eastern region of the
United States, and the financial and structural terms of several other recent
transactions involving mergers and acquisitions of savings institutions or
proposed changes of control of comparably situated companies.
For Hudson River, we reviewed the audited financial statements, 10-K's, and
Proxy Statements for the years ended March 31, 1997, 1998, and 1999, Form 10-Q
for the quarters ended June 30, 1999, September 30, 1999 and December 31, 1999
and certain other information deemed relevant. We also discussed with senior
management of Hudson River, the current position and prospective outlook for
Hudson River.
For purposes of this opinion we have relied, without independent verification,
on the accuracy and completeness of the material furnished to us by the Company
and Hudson River and the material otherwise made available to us, including
information from published sources, and we have not made any independent effort
to verify such data. With respect to the financial information, including
forecasts and asset valuations we received from the Company, we assumed (with
your consent) that they had been reasonably prepared reflecting the best
currently available estimates and judgment of the Company's management. In
addition, we have not made or obtained any independent appraisals or evaluations
of the assets or liabilities, and potential and/or contingent liabilities of the
Company or Hudson River. We have further relied on the assurances of management
of the Company and Hudson River that they are not aware of any facts that would
make such information inaccurate or misleading. We express no opinion on matters
of a legal, regulatory, tax or accounting nature or the ability of the Merger,
as set forth in the Agreement, to be consummated.
In rendering our opinion, we have assumed that in the course of obtaining the
necessary approvals for the Merger, no restrictions or conditions will be
imposed that would have a material adverse effect on the contemplated benefits
of the Merger to the Company or the ability to consummate the Merger. Our
opinion is based on the market, economic and other relevant considerations as
they exist and can be evaluated on the date hereof.
Consistent with the engagement letter with you, we have acted as financial
advisor to the Company in connection with the Merger and will receive a fee for
such services. In addition, the Company has agreed to indemnify us for certain
liabilities arising out of our engagement by the Company in connection with the
Merger.
<PAGE>
Board of Directors
Cohoes Bancorp, Inc.
April 25, 2000
Page 3
Based upon and subject to the foregoing, as outlined in the foregoing paragraphs
and based on such other matters as we considered relevant, it is our opinion
that as of the date hereof, the consideration to be received by the stockholders
of the Company in the Merger is fair, from a financial point of view, to the
stockholders of the Company.
This opinion may not, however, be summarized, excerpted from or otherwise
publicly referred to without our prior written consent, although this opinion
may be included in its entirety in the proxy statement of the Company used to
solicit stockholder approval of the Merger. It is understood that this letter is
directed to the Board of Directors of the Company in its consideration of the
Agreement, and is not intended to be and does not constitute a recommendation to
any stockholder as to how such stockholder should vote with respect to the
Merger.
Very truly yours,
/s/ Keefe, Bruyette, & Woods, Inc.
Keefe, Bruyette, & Woods, Inc.
<PAGE>
APPENDIX D
AMENDMENTS
IN THE
CERTIFICATE OF INCORPORATION OF HUDSON RIVER BANCORP, INC.
TO BE INCLUDED IN CERTIFICATE OF MERGER
I. Article FIRST of the Certificate of Incorporation is amended in its
entirety as follows:
FIRST: The name of the Corporation is Cohoes-Hudson Bancorp, Inc.
(hereinafter sometimes referred to as the Corporation).
II. The first sentence of Section A of Article SIXTH of the Certificate of
Incorporation is amended in its entirety as follows:
"The number of directors shall be fixed from time to time exclusively
by the Board of Directors pursuant to a resolution adopted by a
majority of the Whole Board subject to the provisions of Article
FIFTEENTH of this Certificate of Incorporation.
III. A new Article FIFTEENTH of the Certificate of Incorporation is added as
follows:
FIFTEENTH:
A. For the purpose of this Article FIFTEENTH:
1. "Merger" shall mean the merger of Cohoes Bancorp, Inc.
with and into the Corporation with the Corporation as
the Surviving Corporation.
2. "Surviving Corporation" shall mean the Corporation as
the surviving corporation in the Merger.
3. "Effective Time" shall mean the effective time of the
Merger.
4. "Resolution" shall mean a pre-Merger resolution of the
Board of Directors of each of Cohoes Bancorp, Inc. and
the Corporation, respectively, which
a. Designates six of its current members to be
directors of the Surviving Corporation after the
Merger, and
b. Assigns two of those directors to each of three
classes expiring in 2001, 2002 and 2003,
respectively.
<PAGE>
5. "Group" shall mean each of the two groups of directors
designated by the Resolutions, respectively, of Cohoes
Bancorp, Inc. and the Corporation, including any
successor to a Group member elected as a director in
accordance with this Article FIFTEENTH.
B. This Article FIFTEENTH shall become effective at the Effective
Time; and shall become void and cease to have any effect upon
the earlier of
1. Six years after the Effective Time, or
2. Consummation of a business combination approved by a
majority of the post-Merger Board of Directors of the
Surviving Corporation which results in the post-Merger
shareholders of the Surviving Corporation immediately
prior to the consummation of such business combination
owning less than 51% of the resulting entity immediately
after the consummation of such business combination.
C. Notwithstanding any other provision of this Certificate of
Incorporation and while this Article FIFTEENTH is in effect as
provided in Section (B) above :
1. The Board of Directors of the Surviving Corporation
shall consist of 12 persons, six of whom shall be from
each Group.
2. The class to which each director belongs shall be:
a. The class set forth in the Resolution designating
such director, or
b. The class to which such director's predecessor
belonged.
3. Any vacancy in a Group shall be filled by the remaining
members of that Group. So long as any such person is
available to serve, and subject to the fiduciary duties
of the directors of the Surviving Corporation, any
vacancy in a Group shall be filled from among those
persons who:
a. Were pre-Merger directors of that corporation
which designated such Group, and
b. Are not already directors or emeritus directors of
the Surviving Corporation.
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<PAGE>
4. The Board of Directors of the Surviving Corporation
shall, subject to their fiduciary duties, nominate and
recommend all incumbents for reelection as directors. If
an incumbent declines to stand for reelection, a
candidate will be chosen according to the procedures of
subparagraph 3 above as if such position was a vacancy
and, to the extent permitted by their fiduciary duties,
all directors will vote to nominate and recommend such
candidate to the shareholders. If the directors do not
nominate and recommend such candidate, then the members
of the retiring incumbent's Group shall choose another
candidate according to the procedures of subparagraph 3
above until the directors nominate and recommend such
candidate to the shareholders.
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<PAGE>
APPENDIX E
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of April 25, 2000, between COHOES
BANCORP, INC., a Delaware corporation ("Grantee"), and HUDSON RIVER BANCORP,
INC., a Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger on even date herewith (the "Merger Agreement");
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant
of the Option and the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 3,093,765 fully paid and nonassessable shares of the common stock,
par value $.01 per share, of Issuer ("Common Stock") at a price per share of
$9.3125; (the "Option Price"); provided, that in no event shall the number of
shares for which this Option is exercisable exceed 19.9% of the issued and
outstanding shares of Common Stock, without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and pursuant to an event described in Section 5(a)
hereof), the number of shares of Common Stock subject to the Option shall be
increased so that, after such issuance, such number together with any shares of
Common Stock previously issued pursuant hereto, equals 19.9% of the number of
shares of Common Stock then issued and outstanding without giving effect to any
shares subject or issued pursuant to the Option. Nothing contained in this
Section l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer
to issue shares to others in breach of any provision of the Merger Agreement.
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<PAGE>
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within six months following the first Subsequent Triggering Event to
occur (or such later period as provided in Section 10). Each of the following
shall be an Exercise Termination Event: (i) the Effective Time (as defined in
the Merger Agreement); (ii) termination of the Merger Agreement in accordance
with the provisions thereof if such termination occurs prior to the occurrence
of an Initial Triggering Event, except a termination by Grantee pursuant to
Section 8.1(b) of the Merger Agreement where the breach by Issuer giving rise to
the termination was willful (a "Listed Termination"); or (iii) the passage of 12
months (or such longer period as provided in Section 10) after termination of
the Merger Agreement if such termination follows the occurrence of an Initial
Triggering Event or a Listed Termination (provided that if an Initial Triggering
Event occurs prior to termination of the Merger Agreement and continues beyond
such termination and prior to the passage of such 12-month period, or an Initial
Triggering Event occurs after a Listed Termination and prior to the passage of
such 12 month period, then in either case the Exercise Termination Event shall
be 12 months from the expiration of the Last Triggering Event (as hereinafter
defined) but in no event more than 18 months after such Merger Agreement
termination). The "Last Triggering Event" shall mean the last Initial Triggering
Event to expire. The term "Holder" shall mean the holder or holders of the
Option or any portion thereof. Notwithstanding anything to the contrary
contained herein, the Option may not be exercised at any time when Grantee shall
be in willful breach of the Merger Agreement such that Issuer shall be entitled
to terminate the Merger Agreement pursuant to Section 8.1(b) thereof as a result
of such a willful breach.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any of its Significant Subsidiaries (as defined
in Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) (an "Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter defined) with any
person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
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<PAGE>
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations thereunder) other than Grantee or any of its
Subsidiaries (each a "Grantee Subsidiary") or the Board of Directors of
Issuer (the "Issuer Board") shall have recommended that the shareholders
of Issuer approve or accept any Acquisition Transaction with any person
other than Grantee or a Grantee Subsidiary. For purposes of this
Agreement, (a) "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any Issuer
Subsidiary (other than mergers, consolidations or similar transactions (i)
involving solely Issuer and/or one or more wholly-owned Subsidiaries of
the Issuer, provided, any such transaction is not entered into in
violation of the terms of the Merger Agreement) or (ii) in which
shareholders of Issuer immediately prior to completion of such transaction
own at least 50% of the common stock of Issuer (or the resulting or
surviving entity in such transaction), provided, any such transaction is
not entered into in violation of the terms of the Merger Agreement), (y) a
purchase, lease or other acquisition or assumption of all or any
substantial part of the assets or deposits of Issuer or any Issuer
Subsidiary, or (z) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or any Issuer
Subsidiary and (b) "Grantee Subsidiary" shall mean a subsidiary of Grantee
within the definition set forth in Rule 12b-2 under the Exchange Act;
(ii) Any person, other than the Grantee or any Grantee
Subsidiary, shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the
Exchange Act, and the rules and regulations thereunder);
(iii) It shall have been publicly announced that any person
(other than Grantee or a Grantee Subsidiary) shall have made, or publicly
disclosed an intention to make, a bona fide proposal to engage in an
Acquisition Transaction;
(iv) (x) The Issuer Board, without having received Grantee's
prior written consent, shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) in any manner adverse in
any respect to Grantee its recommendation that the shareholders of Issuer
approve the transactions contemplated by the Merger Agreement, (y) Issuer
or any Issuer Subsidiary, without having received Grantee's prior written
consent, shall have authorized, recommended,
3
<PAGE>
proposed (or publicly announced its intention to authorize, recommend or
propose) an agreement to engage in an Acquisition Transaction with any
person other than Grantee or a Grantee Subsidiary, or (z) Issuer shall
have provided information to or engaged in negotiations with a third party
relating to a possible Acquisition Transaction.
(v) Any person other than Grantee or any Grantee
Subsidiary,shall have filed with the SEC a registration statement or
tender offer materials with respect to a potential exchange or tender
offer that would constitute an Acquisition Transaction (or filed a
preliminary proxy statement with the SEC with respect to a potential vote
by its shareholders to approve the issuance of shares to be offered in
such an exchange offer);
(vi) Issuer shall have willfully breached any covenant or
obligation contained in the Merger Agreement after an overture is made by
a third party to Issuer or its shareholders to engage in an Acquisition
Transaction, and such breach (y) would entitle Grantee to terminate the
Merger Agreement (whether immediately or after the giving of notice or
passage of time or both) and (z) shall not have been cured prior to the
Notice Date (as defined below); or
(vii) Any person, other than Grantee or any Grantee Subsidiary
and other than in connection with a transaction to which Grantee has given
its prior written consent, shall have filed an application or notice with
any federal or state thrift or bank regulatory or antitrust authority,
which application or notice has been accepted for processing, for approval
to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of an Initial Triggering Event described
in clause (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (z) of the second sentence thereof shall
be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
4
<PAGE>
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of any regulatory or
antitrust agency is required in connection with such purchase, the Holder shall
promptly file the required notice or application for approval, shall promptly
notify Issuer of such filing and shall expeditiously process the same and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods have expired or
been terminated or such approvals have been obtained and any requisite waiting
period or periods shall have passed. Any exercise of the Option shall be deemed
to occur on the Notice Date relating thereto. The term "business day" for
purposes of this Agreement means any day, excluding Saturdays, Sundays and any
other day that is a legal holiday in the State of New York or a day on which
banking institutions in the State of New York are authorized by law or executive
order to close.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option is exercised
in part only, a new Option evidencing the rights of the Holder thereof to
purchase the balance of the shares purchasable hereunder, and the Holder shall
deliver to Issuer a copy of this Agreement and a letter agreeing that the Holder
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
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<PAGE>
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file at
the principal office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "Securities Act"), in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the Securities Act; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference in the opinion
of counsel to the Holder in form and substance reasonably satisfactory to
Issuer; and (iii) the legend shall be removed in its entirety if the conditions
in the preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2, the
tender of the applicable purchase price in immediately available funds and the
tender of a copy of this Agreement to Issuer, the Holder shall be deemed,
subject to the receipt of any necessary regulatory approvals, to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger,
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<PAGE>
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by Issuer; (iii) promptly to
take all action as may from time to time be required (including without
limitation(x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under any state or
federal thrift or banking law, prior approval of or notice to any state or
federal regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to such state or federal regulatory authority as they
may require) in order to permit the Holder to exercise the Option and Issuer
duly and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5.
(a) In the event of any change in Issuer Common Stock by reason of a stock
dividend, stock split, split-up, recapitalization, combination, exchange of
shares or similar transaction, the type and number of shares or securities
subject to
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the Option shall be adjusted appropriately, and proper provision shall be made
in the agreements governing such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 5(a) or other than pursuant to
this Agreement), the number of shares of Issuer Common Stock subject to the
option shall be adjusted so that, after such issuance, it together with any
shares of Issuer Common Stock previously issued pursuant hereto, equals 19.9% of
the number of shares of Issuer Common Stock then issued and outstanding, without
giving effect to any shares subject to or issued pursuant to the Option.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six months (or such later period as provided in Section 10) of
such Subsequent Triggering Event (whether on its own behalf or on behalf of any
subsequent holder of this Option (or part thereof) or any of the shares of
Common Stock issued pursuant hereto), promptly prepare, file and keep current a
shelf registration statement under the Securities Act covering this Option and
any shares issued and issuable pursuant to this Option and shall use its
reasonable best efforts to cause such registration statement to become effective
and remain current in order to permit the sale or other disposition of this
Option and any shares of Common Stock issued upon total or partial exercise of
this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement promptly to become effective and then to remain effective
for such period not in excess of 6 months from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations, provided that any second registration
shall be requested by Grantee within 12 months (or such later period as provided
in Section 10) following the occurrence of the Subsequent Triggering Event. The
Issuer shall bear the costs of such registrations (including, but
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not limited to, Issuer's attorneys' fees, printing costs and filing fees, except
for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering by Issuer of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering, the offer and sale of the Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of all Holders shall constitute at least 25% of the total number
of shares to be sold by the Holders and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then Issuer shall file a
registration statement for the balance as promptly as practicable thereafter as
to which no reduction pursuant to this Section 6 shall be permitted or occur and
the Holder shall thereafter be entitled to one additional registration and the
12-month period referred to above shall be increased to 18 months. Each such
Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements for Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights under this Section
6, in each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies. Notwithstanding anything
to the contrary contained herein, in no event shall the number of registrations
that Issuer is obligated to effect be increased by reason of the fact that there
shall be more than one Holder as a result of any assignment or division of this
Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
Market/Offer Price (as defined below) exceeds (B) the Option Price,
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multiplied by the number of shares for which this Option may then be exercised
and (ii) at the request of the owner of Option Shares from time to time (the
"Owner"), delivered prior to an Exercise Termination Event (or such later period
as provided in Section 10), Issuer (or any successor thereto) shall repurchase
such number of the Option Shares from the Owner as the Owner shall designate at
a price (the "Option Share Repurchase Price") equal to the Market/Offer Price
multiplied by the number of Option Shares so designated. The term "Market/Offer
Price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock paid or to be paid by any third party, other than Grantee
or a Grantee Subsidiary, pursuant to an agreement with Issuer of the kind
described in Section 2(b)(i) hereof, (iii) the highest closing price for shares
of Common Stock within the six-month period immediately preceding the date the
Holder gives notice of the required repurchase of this Option or the Owner gives
notice of the required repurchase of Option Shares, as the case may be, or (iv)
in the event of a sale or transfer of all or any substantial part of Issuer's
assets or deposits, the sum of the net price paid in such sale for such assets
or deposits and the current market value of the remaining net assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to Issuer,
divided by the number of shares of Common Stock of Issuer outstanding at the
time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. The Owner shall also represent and warrant that it has sole record
and beneficial ownership of such Option Shares and that such Option Shares are
free and clear of all liens. As promptly as practicable, and in any event within
five business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto, Issuer shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase Price therefor
or the portion thereof that Issuer is not then prohibited under applicable law
and regulation from so delivering.
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(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or regulatory
body or agency, from delivering to the Holder and/or the Owner, as appropriate,
the Option Repurchase Price and the Option Share Repurchase Price, respectively,
in part or in full (and Issuer hereby undertakes to use its reasonable best
efforts to obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option and/or the Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to
the Holder and/or the Owner, as appropriate, that portion of the Option
Repurchase Price and/or the Option Share Repurchase Price that Issuer is not
prohibited from delivering with respect to Options or Option Shares as to which
the Holder or the Owner, as the case may be, has not revoked its repurchase
demand; and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock
Option Agreement evidencing the right of the Holder to purchase that number of
shares of Common Stock obtained by multiplying the number of shares of Common
Stock for which the surrendered Stock Option Agreement was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Option Repurchase Price less the portion thereof theretofore
delivered to the Holder and the denominator of which is the Option Repurchase
Price, and/or (B) to the Owner, a certificate for the Option Shares it is then
so prohibited from repurchasing. If an Exercise Termination Event shall have
occurred prior to the date of the notice by Issuer described in the first
sentence of this subsection (c), or shall be scheduled to occur at any time
before the expiration of a period ending on the thirtieth day after such date,
the Holder shall nonetheless have the right to exercise the Option until the
expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed
to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
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(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described
in Section 2(b)(i) hereof, except that the percentage referred to in
clause (z) shall be 50%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or a substantial part of its or the Issuer savings bank Subsidiary's assets or
deposits to any person, other than Grantee or a Grantee Subsidiary, then, and in
each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) the Issuer in a merger or plan of exchange in which
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of the Issuer savings bank Subsidiary).
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(ii) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for one year immediately preceding
the consolidation, merger, share exchange or sale in question, but in no
event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger, share exchange or
sale; provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by the person merging into Issuer or by any company which controls
or is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect for
such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
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clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by a majority in interest
of the Holders and the Owners, and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) Each Substitute Option Holder and Substitute Share Owner, as the case
may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such
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notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or, in either case, the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Substitute
Option and/or the Substitute Shares in part or in full, the Substitute Option
Issuer shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or the Substitute Share Owner,
as appropriate, the portion of the Substitute Option Repurchase Price and/or the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited; provided, however, that
if the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price, respectively,
in full (and the Substitute Option Issuer shall use its reasonable best efforts
to receive all required regulatory and legal approvals as promptly as
practicable in order to accomplish such repurchase), the Substitute Option
Holder and/or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the extent of
prohibition, whereupon, in the latter case, the Substitute Option Issuer shall
promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner,
as appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option
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Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option
Holder shall nevertheless have the right to exercise the Substitute Option until
the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month or 18-month periods for exercise of
certain rights under Sections 2, 6, 7 and 9 shall be extended: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of such rights,
and for the expiration of all statutory waiting periods;(ii) during the pendency
of any temporary restraining order, injunction or other legal bar to the
exercise of such rights; and (iii) to the extent necessary to avoid liability
under Section 16(b) of the Exchange Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board on or prior to the date hereof and no other corporate proceedings
on the part of Issuer are necessary to authorize this Agreement or to consummate
the transactions so contemplated. This Agreement has been duly and validly
executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Grantee hereby represents and warrants to Issuer that:
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(a) Grantee has all requisite corporate power and authority to enter into,
execute and deliver this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee and no other corporate proceedings on
the part of Grantee are necessary to authorize this Agreement or to consummate
the transactions so contemplated. This Agreement has been duly executed and
delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; within six months
following such Subsequent Triggering Event; provided, however, that until the
date 15 days following the date on which the applicable bank or thrift regulator
has approved an application by Grantee to acquire the shares of Common Stock
subject to the Option, but only if such approval is required, Grantee may not
assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the sole purpose of
conducting a widely dispersed public distribution on Grantee's behalf or (iv)
any other manner approved by the applicable bank or thrift regulator.
14. Each of Grantee and Issuer will use its reasonable best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement.
15. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the
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Surrender Price (as hereinafter defined); provided, however, that Grantee may
not exercise its rights pursuant to this Section 15 if Issuer has repurchased
the Option (or any portion thereof) or any Option Shares pursuant to Section 7.
The "Surrender Price" shall be equal to $4.4 million (i) plus, if applicable,
Grantee's purchase price with respect to any Option Shares and (ii) minus, if
applicable, the excess of (A) the net cash amounts, if any, received by Grantee
or a Grantee Subsidiary pursuant to the arms' length sale of Option Shares (or
any other securities into which such Option Shares were converted or exchanged)
to any unaffiliated party, over (B) Grantee's purchase price of such Option
Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 15 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 15 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or regulatory
body or agency, from paying the Surrender Price to Grantee in full, Issuer shall
immediately so notify Grantee and thereafter deliver or cause to be delivered,
from time to time, to Grantee, the portion of the Surrender Price that it is no
longer prohibited from paying, within five business days after the date on which
Issuer is no longer so prohibited; provided, however, that if Issuer at any time
after delivery of a notice of surrender pursuant to paragraph (b) of this
Section 15 is prohibited under applicable law or regulation, or as a consequence
of administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from paying to
Grantee the Surrender Price in full, (i) Issuer shall (A) use its reasonable
best efforts to obtain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to make such payments,
(B) within five days of the submission or receipt of any documents relating to
any such regulatory and legal approvals, provide Grantee with copies of the
same, and (c) keep Grantee advised of both the status of any such request for
regulatory and legal approvals, as well as any discussions with any relevant
regulatory or other third party reasonably related to the same and (ii) Grantee
may revoke such notice of surrender by delivery of a notice of revocation to
Issuer and, upon delivery of such notice of
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revocation, the Exercise Termination Event shall be extended to a date six
months from the date on which the Exercise Termination Event would have occurred
if not for the provisions of this Section 15(c) (during which period Grantee may
exercise any of its rights hereunder, including any and all rights pursuant to
this Section 15).
16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
17. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to Sections
7 or 9, as the case may be, the full number of shares of Common Stock provided
in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section 5
hereof), it is the express intention of Issuer (which shall be binding on
Substitute Option Issuer) to allow the Holder to acquire or to require Issuer or
Substitute Option Issuer, as the case may be, to repurchase such lesser number
of shares as may be permissible, without any amendment or modification hereof.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
19. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law are applicable).
20. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
21. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses
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incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assignees, any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided herein.
23. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
ATTEST: COHOES BANCORP, INC.
/s/ Richard A. Ahl By: /s/ Harry L. Robinson
------------------------------ --------------------------
Richard A. Ahl, Secretary Harry L. Robinson, President
ATTEST: HUDSON RIVER BANCORP, INC.
/s/ Holly Rappleyea By: /s/ Carl A. Florio
------------------------------ --------------------------
Holly Rappleyea, Secretary Carl A. Florio, President
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APPENDIX F
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of April 25, 2000, between HUDSON RIVER
BANCORP, INC., a Delaware corporation ("Grantee"), and COHOES BANCORP, INC., a
Delaware corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger on even date herewith (the "Merger Agreement");
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
WHEREAS, the Board of Directors of Issuer has approved the grant
of the Option and the Merger Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to an
aggregate of 1,574,538 fully paid and nonassessable shares of the common stock,
par value $.01 per share, of Issuer ("Common Stock") at a price per share of
$9.8125(the "Option Price"); provided, that in no event shall the number of
shares for which this Option is exercisable exceed 19.9% of the issued and
outstanding shares of Common Stock, without giving effect to any shares subject
to or issued pursuant to the Option. The number of shares of Common Stock that
may be received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and pursuant to an event described in Section 5(a)
hereof), the number of shares of Common Stock subject to the Option shall be
increased so that, after such issuance, such number together with any shares of
Common Stock previously issued pursuant hereto, equals 19.9% of the number of
shares of Common Stock then issued and outstanding without giving effect to any
shares subject or issued pursuant to the Option. Nothing contained in this
Section l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer
to issue shares to others in breach of any provision of the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if,
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both an Initial Triggering Event (as hereinafter defined) and a Subsequent
Triggering Event (as hereinafter defined) shall have occurred prior to the
occurrence of an Exercise Termination Event (as hereinafter defined), provided
that the Holder shall have sent the written notice of such exercise (as provided
in subsection (e) of this Section 2) within six months following the first
Subsequent Triggering Event to occur (or such later period as provided in
Section 10). Each of the following shall be an Exercise Termination Event: (i)
the Effective Time (as defined in the Merger Agreement); (ii) termination of the
Merger Agreement in accordance with the provisions thereof if such termination
occurs prior to the occurrence of an Initial Triggering Event, except a
termination by Grantee pursuant to Section 8.1(b) of the Merger Agreement where
the breach by Issuer giving rise to the termination was willful (a "Listed
Termination"); or (iii) the passage of 12 months (or such longer period as
provided in Section 10) after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or a Listed
Termination (provided that if an Initial Triggering Event occurs prior to
termination of the Merger Agreement and continues beyond such termination and
prior to the passage of such 12-month period, or an Initial Triggering Event
occurs after a Listed Termination and prior to the passage of such 12 month
period, then in either case the Exercise Termination Event shall be 12 months
from the expiration of the Last Triggering Event (as hereinafter defined) but in
no event more than 18 months after such Merger Agreement termination). The "Last
Triggering Event" shall mean the last Initial Triggering Event to expire. The
term "Holder" shall mean the holder or holders of the Option or any portion
thereof. Notwithstanding anything to the contrary contained herein, the Option
may not be exercised at any time when Grantee shall be in willful breach of the
Merger Agreement such that Issuer shall be entitled to terminate the Merger
Agreement pursuant to Section 8.1(b) thereof as a result of such a willful
breach.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) Issuer or any of its Significant Subsidiaries (as defined
in Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) (an "Issuer Subsidiary"), without having received
Grantee's prior written consent, shall have entered into an agreement to
engage in an Acquisition Transaction (as hereinafter defined) with any
person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations thereunder) other than
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Grantee or any of its Subsidiaries (each a "Grantee Subsidiary") or the
Board of Directors of Issuer (the "Issuer Board") shall have recommended
that the shareholders of Issuer approve or accept any Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary.
For purposes of this Agreement, (a) "Acquisition Transaction" shall mean
(x) a merger or consolidation, or any similar transaction, involving
Issuer or any Issuer Subsidiary (other than mergers, consolidations or
similar transactions (i) involving solely Issuer and/or one or more
wholly-owned Subsidiaries of the Issuer, provided, any such transaction is
not entered into in violation of the terms of the Merger Agreement) or
(ii) in which shareholders of Issuer immediately prior to completion of
such transaction own at least 50% of the common stock of Issuer (or the
resulting or surviving entity in such transaction), provided, any such
transaction is not entered into in violation of the terms of the Merger
Agreement), (y) a purchase, lease or other acquisition or assumption of
all or any substantial part of the assets or deposits of Issuer or any
Issuer Subsidiary, or (z) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or any Issuer
Subsidiary and (b) "Grantee Subsidiary" shall mean a subsidiary of Grantee
within the definition set forth in Rule 12b-2 under the Exchange Act;
(ii) Any person, other than the Grantee or any Grantee
Subsidiary, shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the term "beneficial ownership" for purposes of this
Agreement having the meaning assigned thereto in Section 13(d) of the
Exchange Act, and the rules and regulations thereunder);
(iii) It shall have been publicly announced that any person
(other than Grantee or a Grantee Subsidiary) shall have made, or publicly
disclosed an intention to make, a bona fide proposal to engage in an
Acquisition Transaction;
(iv) (x) The Issuer Board, without having received Grantee's
prior written consent, shall have withdrawn or modified (or publicly
announced its intention to withdraw or modify) in any manner adverse in
any respect to Grantee its recommendation that the shareholders of Issuer
approve the transactions contemplated by the Merger Agreement, (y) Issuer
or any Issuer Subsidiary, without having received Grantee's prior written
consent, shall have authorized, recommended, proposed (or publicly
announced its intention to authorize, recommend or propose) an agreement
to engage in an Acquisition
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Transaction with any person other than Grantee or a Grantee Subsidiary or
(z) Issuer shall have provided information to or engaged in negotiations
with a third party relating to a possible Acquisition Transaction.
(v) Any person, other than Grantee or any Grantee Subsidiary,
shall have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that would
constitute an Acquisition Transaction (or filed a preliminary proxy
statement with the SEC with respect to a potential vote by its
shareholders to approve the issuance of shares to be offered in such an
exchange offer);
(vi) Issuer shall have willfully breached any covenant or
obligation contained in the Merger Agreement after an overture is made by
a third party to Issuer or its shareholders to engage in an Acquisition
Transaction, and such breach (y) would entitle Grantee to terminate the
Merger Agreement (whether immediately or after the giving of notice or
passage of time or both) and (z) shall not have been cured prior to the
Notice Date (as defined below); or
(vii) Any person, other than Grantee or any Grantee Subsidiary
and other than in connection with a transaction to which Grantee has given
its prior written consent, shall have filed an application or notice with
any federal or state thrift or bank regulatory or antitrust authority,
which application or notice has been accepted for processing, for approval
to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of an Initial Triggering Event described
in clause (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (z) of the second sentence thereof shall
be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence of
any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
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(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 60 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of any regulatory or
antitrust agency is required in connection with such purchase, the Holder shall
promptly file the required notice or application for approval, shall promptly
notify Issuer of such filing and shall expeditiously process the same and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods have expired or
been terminated or such approvals have been obtained and any requisite waiting
period or periods shall have passed. Any exercise of the Option shall be deemed
to occur on the Notice Date relating thereto. The term "business day" for
purposes of this Agreement means any day, excluding Saturdays, Sundays and any
other day that is a legal holiday in the State of New York or a day on which
banking institutions in the State of New York are authorized by law or executive
order to close.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall (i) pay to Issuer the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer and (ii)
present and surrender this Agreement to Issuer at its principal executive
offices, provided that the failure or refusal of the Issuer to designate such a
bank account or accept surrender of this Agreement shall not preclude the Holder
from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option is exercised
in part only, a new Option evidencing the rights of the Holder thereof to
purchase the balance of the shares purchasable hereunder, and the Holder shall
deliver to Issuer a copy of this Agreement and a letter agreeing that the Holder
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
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"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the registered
holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file at
the principal office of Issuer and will be provided to the holder hereof
without charge upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "Securities Act"), in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the Securities Act; (ii) the reference to the provisions of this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference in the opinion
of counsel to the Holder in form and substance reasonably satisfactory to
Issuer; and (iii) the legend shall be removed in its entirety if the conditions
in the preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2, the
tender of the applicable purchase price in immediately available funds and the
tender of a copy of this Agreement to Issuer, the Holder shall be deemed,
subject to the receipt of any necessary regulatory approvals, to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger,
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dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by Issuer; (iii) promptly to
take all action as may from time to time be required (including without
limitation (x) complying with all applicable premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under any state or
federal thrift or banking law, prior approval of or notice to any state or
federal regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to such state or federal regulatory authority as they
may require) in order to permit the Holder to exercise the Option and Issuer
duly and effectively to issue shares of Common Stock pursuant hereto; and (iv)
promptly to take all action provided herein to protect the rights of the Holder
against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Agreements and
related Options for which this Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Agreement, if mutilated, Issuer will
execute and deliver a new Agreement of like tenor and date. Any such new
Agreement executed and delivered shall constitute an additional contractual
obligation on the part of Issuer, whether or not the Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5.
(a) In the event of any change in Issuer Common Stock by reason of a stock
dividend, stock split, split-up, recapitalization, combination, exchange of
shares or similar transaction, the type and number of shares or securities
subject to
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the Option shall be adjusted appropriately, and proper provision shall be made
in the agreements governing such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional shares of Issuer Common Stock
are issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 5(a) or other than pursuant to
this Agreement), the number of shares of Issuer Common Stock subject to the
option shall be adjusted so that, after such issuance, it together with any
shares of Issuer Common Stock previously issued pursuant hereto, equals 19.9% of
the number of shares of Issuer Common Stock then issued and outstanding, without
giving effect to any shares subject to or issued pursuant to the Option.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs prior
to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six months (or such later period as provided in Section 10) of
such Subsequent Triggering Event (whether on its own behalf or on behalf of any
subsequent holder of this Option (or part thereof) or any of the shares of
Common Stock issued pursuant hereto), promptly prepare, file and keep current a
shelf registration statement under the Securities Act covering this Option and
any shares issued and issuable pursuant to this Option and shall use its
reasonable best efforts to cause such registration statement to become effective
and remain current in order to permit the sale or other disposition of this
Option and any shares of Common Stock issued upon total or partial exercise of
this Option ("Option Shares") in accordance with any plan of disposition
requested by Grantee. Issuer will use its reasonable best efforts to cause such
registration statement promptly to become effective and then to remain effective
for such period not in excess of 6 months from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations, provided that any second registration
shall be requested by Grantee within 12 months (or such later period as provided
in Section 10) following the occurrence of the Subsequent Triggering Event. The
Issuer shall bear the costs of such registrations (including, but
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not limited to, Issuer's attorneys' fees, printing costs and filing fees, except
for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering by Issuer of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering, the offer and sale of the Option Shares would interfere with the
successful marketing of the shares of Common Stock offered by Issuer, the number
of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of all Holders shall constitute at least 25% of the total number
of shares to be sold by the Holders and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then Issuer shall file a
registration statement for the balance as promptly as practicable thereafter as
to which no reduction pursuant to this Section 6 shall be permitted or occur and
the Holder shall thereafter be entitled to one additional registration and the
12-month period referred to above shall be increased to 18 months. Each such
Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements for Issuer. Upon receiving any request under this
Section 6 from any Holder, Issuer agrees to send a copy thereof to any other
person known to Issuer to be entitled to registration rights under this Section
6, in each case by promptly mailing the same, postage prepaid, to the address of
record of the persons entitled to receive such copies. Notwithstanding anything
to the contrary contained herein, in no event shall the number of registrations
that Issuer is obligated to effect be increased by reason of the fact that there
shall be more than one Holder as a result of any assignment or division of this
Agreement.
7. (a) At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as provided in Section 10), Issuer (or
any successor thereto) shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
Market/Offer Price (as defined below) exceeds (B) the Option Price,
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multiplied by the number of shares for which this Option may then be exercised
and (ii) at the request of the owner of Option Shares from time to time (the
"Owner"), delivered prior to an Exercise Termination Event (or such later period
as provided in Section 10), Issuer (or any successor thereto) shall repurchase
such number of the Option Shares from the Owner as the Owner shall designate at
a price (the "Option Share Repurchase Price") equal to the Market/Offer Price
multiplied by the number of Option Shares so designated. The term "Market/Offer
Price" shall mean the highest of (i) the price per share of Common Stock at
which a tender or exchange offer therefor has been made, (ii) the price per
share of Common Stock paid or to be paid by any third party, other than Grantee
or a Grantee Subsidiary, pursuant to an agreement with Issuer of the kind
described in Section 2(b)(i) hereof, (iii) the highest closing price for shares
of Common Stock within the six-month period immediately preceding the date the
Holder gives notice of the required repurchase of this Option or the Owner gives
notice of the required repurchase of Option Shares, as the case may be, or (iv)
in the event of a sale or transfer of all or any substantial part of Issuer's
assets or deposits, the sum of the net price paid in such sale for such assets
or deposits and the current market value of the remaining net assets of Issuer
as determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to Issuer,
divided by the number of shares of Common Stock of Issuer outstanding at the
time of such sale. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be, and
reasonably acceptable to Issuer.
(b) The Holder and the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
Option and/or the Option Shares in accordance with the provisions of this
Section 7. The Owner shall also represent and warrant that it has sole record
and beneficial ownership of such Option Shares and that such Option Shares are
free and clear of all liens. As promptly as practicable, and in any event within
five business days after the surrender of the Option and/or certificates
representing Option Shares and the receipt of such notice or notices relating
thereto, Issuer shall deliver or cause to be delivered to the Holder the Option
Repurchase Price and/or to the Owner the Option Share Repurchase Price therefor
or the portion thereof that Issuer is not then prohibited under applicable law
and regulation from so delivering.
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(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or regulatory
body or agency, from delivering to the Holder and/or the Owner, as appropriate,
the Option Repurchase Price and the Option Share Repurchase Price, respectively,
in part or in full (and Issuer hereby undertakes to use its reasonable best
efforts to obtain all required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to accomplish such
repurchase), the Holder or Owner may revoke its notice of repurchase of the
Option and/or the Option Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, Issuer shall promptly (i) deliver to
the Holder and/or the Owner, as appropriate, that portion of the Option
Repurchase Price and/or the Option Share Repurchase Price that Issuer is not
prohibited from delivering with respect to Options or Option Shares as to which
the Holder or the Owner, as the case may be, has not revoked its repurchase
demand; and (ii) deliver, as appropriate, either (A) to the Holder, a new Stock
Option Agreement evidencing the right of the Holder to purchase that number of
shares of Common Stock obtained by multiplying the number of shares of Common
Stock for which the surrendered Stock Option Agreement was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Option Repurchase Price less the portion thereof theretofore
delivered to the Holder and the denominator of which is the Option Repurchase
Price, and/or (B) to the Owner, a certificate for the Option Shares it is then
so prohibited from repurchasing. If an Exercise Termination Event shall have
occurred prior to the date of the notice by Issuer described in the first
sentence of this subsection (c), or shall be scheduled to occur at any time
before the expiration of a period ending on the thirtieth day after such date,
the Holder shall nonetheless have the right to exercise the Option until the
expiration of such 30-day period.
(d) For purposes of this Section 7, a "Repurchase Event" shall be deemed
to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
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(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described
in Section 2(b)(i) hereof, except that the percentage referred to in
clause (z) shall be 50%.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary and Issuer shall not be
the continuing or surviving corporation of such consolidation or merger or the
acquirer in such plan of exchange, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer or be acquired by Issuer in a plan
of exchange and Issuer shall be the continuing or surviving or acquiring
corporation, but, in connection with such merger or plan of exchange, the then
outstanding shares of Common Stock shall be changed into or exchanged for stock
or other securities of any other person or cash or any other property or the
then outstanding shares of Common Stock shall after such merger or plan of
exchange represent less than 50% of the outstanding shares and share equivalents
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or a substantial part of its or the Issuer savings bank Subsidiary's assets or
deposits to any person, other than Grantee or a Grantee Subsidiary, then, and in
each such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option"), at the election of
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer
is acquired, (iii) the Issuer in a merger or plan of exchange in which
Issuer is the continuing or surviving or acquiring person, and (iv) the
transferee of all or a substantial part of Issuer's assets or deposits (or
the assets or deposits of the Issuer savings bank Subsidiary).
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(ii) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for one year immediately preceding
the consolidation, merger, share exchange or sale in question, but in no
event higher than the closing price of the shares of Substitute Common
Stock on the day preceding such consolidation, merger, share echange or
sale; provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock
issued by the person merging into Issuer or by any company which controls
or is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the Option,
provided that if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to the Holder. The issuer of the Substitute Option shall
also enter into an agreement with the then Holder or Holders of the Substitute
Option in substantially the same form as this Agreement (after giving effect for
such purpose to the provisions of Section 9), which agreement shall be
applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of shares
of Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% of the shares of Substitute
Common Stock outstanding prior to exercise of the Substitute Option. In the
event that the Substitute Option would be exercisable for more than 19.9% of the
shares of Substitute Common Stock outstanding prior to exercise but for this
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clause (e), the issuer of the Substitute Option (the "Substitute Option Issuer")
shall make a cash payment to Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by a majority in interest
of the Holders and the Owners and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in subsection
(a) of this Section 8 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option Issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) Each Substitute Option Holder and Substitute Share Owner, as the case
may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such
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notice or notices relating thereto, the Substitute Option Issuer shall deliver
or cause to be delivered to the Substitute Option Holder the Substitute Option
Repurchase Price and/or to the Substitute Share Owner the Substitute Share
Repurchase Price therefor or, in either case, the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from repurchasing the Substitute
Option and/or the Substitute Shares in part or in full, the Substitute Option
Issuer shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or the Substitute Share Owner,
as appropriate, the portion of the Substitute Option Repurchase Price and/or the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited; provided, however, that
if the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price, respectively,
in full (and the Substitute Option Issuer shall use its reasonable best efforts
to receive all required regulatory and legal approvals as promptly as
practicable in order to accomplish such repurchase), the Substitute Option
Holder and/or Substitute Share Owner may revoke its notice of repurchase of the
Substitute Option or the Substitute Shares either in whole or to the extent of
prohibition, whereupon, in the latter case, the Substitute Option Issuer shall
promptly (i) deliver to the Substitute Option Holder or Substitute Share Owner,
as appropriate, that portion of the Substitute Option Repurchase Price or the
Substitute Share Repurchase Price that the Substitute Option Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of the
Substitute Option Holder to purchase that number of shares of the Substitute
Common Stock obtained by multiplying the number of shares of the Substitute
Common Stock for which the surrendered Substitute Option was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator of
which is the Substitute Option
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Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option
Holder shall nevertheless have the right to exercise the Substitute Option until
the expiration of such 30-day period.
10. The 30-day, 6-month, 12-month or 18-month periods for exercise of
certain rights under Sections 2, 6, 7 and 9 shall be extended: (i) to the extent
necessary to obtain all regulatory approvals for the exercise of such rights,
and for the expiration of all statutory waiting periods; (ii) during the
pendency of any temporary restraining order, injunction or other legal bar to
the exercise of such rights; and (iii) to the extent necessary to avoid
liability under Section 16(b) of the Exchange Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board on or prior to the date hereof and no other corporate proceedings
on the part of Issuer are necessary to authorize this Agreement or to consummate
the transactions so contemplated. This Agreement has been duly and validly
executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
12. Grantee hereby represents and warrants to Issuer that:
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(a) Grantee has all requisite corporate power and authority to enter into,
execute and deliver this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee and no other corporate proceedings on
the part of Grantee are necessary to authorize this Agreement or to consummate
the transactions so contemplated. This Agreement has been duly executed and
delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or other
securities acquired by Grantee upon exercise of the Option will not be, acquired
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
13. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within six months
following such Subsequent Triggering Event; provided, however, that until the
date 15 days following the date on which the applicable bank or thrift regulator
has approved an application by Grantee to acquire the shares of Common Stock
subject to the Option, but only if such approval is required, Grantee may not
assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the sole purpose of
conducting a widely dispersed public distribution on Grantee's behalf or (iv)
any other manner approved by the applicable bank or thrift regulator.
14. Each of Grantee and Issuer will use its reasonable best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement.
15. (a) Grantee may, at any time following a Repurchase Event and prior to
the occurrence of an Exercise Termination Event (or such later period as
provided in Section 10), relinquish the Option (together with any Option Shares
issued to and then owned by Grantee) to Issuer in exchange for a cash fee equal
to the
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Surrender Price (as hereinafter defined); provided, however, that Grantee may
not exercise its rights pursuant to this Section 15 if Issuer has repurchased
the Option (or any portion thereof) or any Option Shares pursuant to Section 7.
The "Surrender Price" shall be equal to $4.4 million (i) plus, if applicable,
Grantee's purchase price with respect to any Option Shares and (ii) minus, if
applicable, the excess of (A) the net cash amounts, if any, received by Grantee
or a Grantee Subsidiary pursuant to the arms' length sale of Option Shares (or
any other securities into which such Option Shares were converted or exchanged)
to any unaffiliated party, over (B) Grantee's purchase price of such Option
Shares.
(b) Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 15 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 15 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, or as a result of a
written agreement or other binding obligation with a governmental or regulatory
body or agency, from paying the Surrender Price to Grantee in full, Issuer shall
immediately so notify Grantee and thereafter deliver or cause to be delivered,
from time to time, to Grantee, the portion of the Surrender Price that it is no
longer prohibited from paying, within five business days after the date on which
Issuer is no longer so prohibited; provided, however, that if Issuer at any time
after delivery of a notice of surrender pursuant to paragraph (b) of this
Section 15 is prohibited under applicable law or regulation, or as a consequence
of administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from paying to
Grantee the Surrender Price in full, (i) Issuer shall (A) use its reasonable
best efforts to obtain all required regulatory and legal approvals and to file
any required notices as promptly as practicable in order to make such payments,
(B) within five days of the submission or receipt of any documents relating to
any such regulatory and legal approvals, provide Grantee with copies of the
same, and (c) keep Grantee advised of both the status of any such request for
regulatory and legal approvals, as well as any discussions with any relevant
regulatory or other third party reasonably related to the same and (ii) Grantee
may revoke such notice of surrender by delivery of a notice of revocation to
Issuer and, upon delivery of such notice of
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revocation, the Exercise Termination Event shall be extended to a date six
months from the date on which the Exercise Termination Event would have occurred
if not for the provisions of this Section 15(c) (during which period Grantee may
exercise any of its rights hereunder, including any and all rights pursuant to
this Section 15).
16. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief. In connection therewith both
parties waive the posting of any bond or similar requirement.
17. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to Sections
7 or 9, as the case may be, the full number of shares of Common Stock provided
in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section 5
hereof), it is the express intention of Issuer (which shall be binding on
Substitute Option Issuer) to allow the Holder to acquire or to require Issuer or
Substitute Option Issuer, as the case may be, to repurchase such lesser number
of shares as may be permissible, without any amendment or modification hereof.
18. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
19. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to the conflict of law
principles thereof (except to the extent that mandatory provisions of Federal
law are applicable).
20. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
21. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses
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incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.
22. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assignees, any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided herein.
23. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
ATTEST: HUDSON RIVER BANCORP, INC.
/s/ Holly Rappleyea By: /s/ Carl A. Florio
------------------------------ --------------------------
Holly Rappleyea, Secretary Carl A. Florio, President
ATTEST: COHOES BANCORP, INC.
/s/ Richard A. Ahl By: /s/ Harry L. Robinson
------------------------------ --------------------------
Richard A. Ahl, Secretary Harry L. Robinson, President
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APPENDIX G
HUDSON RIVER BANCORP, INC.
1998 AMENDED STOCK OPTION AND INCENTIVE PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, advisory directors, directors emeriti,
officers and employees of the Corporation and its Affiliates. It is intended
that designated Options granted pursuant to the provisions of this Plan to
persons employed by the Corporation or its Affiliates will qualify as Incentive
Stock Options. Options granted to persons who are not employees will be
Non-Qualified Stock Options.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" - means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Bank" - means Hudson River Bank & Trust Company and any successor entity.
"Award" - means the grant of an Incentive Stock Option, a Non-Qualified
Stock Option, a Stock Appreciation Right, a Limited Stock Appreciation Right or
any combination thereof, as provided in the Plan.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee referred to in Section 3 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, advisory director, director emeritus,
officer or employee of the Corporation or an Affiliate, except that when used
with respect to any Options or Rights which at the time of exercise are intended
to be Incentive Stock Options, continuous service means the absence of any
interruption or termination of service as an employee of the Corporation or an
Affiliate. Service shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Corporation
or in the case of transfers between payroll locations of the Corporation or
between the Corporation, its parent, its subsidiaries or its successor. With
respect to any advisory director or director emeritus, continuous service shall
mean availability to perform such functions as may be required of such persons.
"Corporation" - means Hudson River Bancorp, Inc., a Delaware corporation.
"Employee" - means any person, including an officer or director, who is
employed by the Corporation or any Affiliate.
"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
"Exercise Price" - means (i) in the case of an Option, the price per Share
at which the Shares subject to such Option may be purchased upon exercise of
such Option and (ii) in the case of a Right,
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the price per Share (other than the Market Value per Share on the date of
exercise and the Offer Price per Share as defined in Section 10 hereof) which,
upon grant, the Committee determines shall be utilized in calculating the
aggregate value which a Participant shall be entitled to receive pursuant to
Sections 9, 10 or 12 hereof upon exercise of such Right.
"Incentive Stock Option" - means an option to purchase Shares granted by
the Committee pursuant to Section 6 hereof which is subject to the limitations
and restrictions of Section 8 hereof and is intended to qualify under Section
422(b) of the Code.
"Limited Stock Appreciation Right" - means a stock appreciation right with
respect to Shares granted by the Committee pursuant to Sections 6 and 10 hereof.
"Market Value" - means the average of the high and low quoted sales price
on the date in question (or, if there is no reported sale on such date, on the
last preceding date on which any reported sale occurred) of a Share on the
Composite Tape for the New York Stock Exchange-Listed Stocks, or, if on such
date the Shares are not quoted on the Composite Tape, on the New York Stock
Exchange, or, if the Shares are not listed or admitted to trading on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which the Shares are listed or admitted
to trading, or, if the Shares are not listed or admitted to trading on any such
exchange, the mean between the closing high bid and low asked quotations with
respect to a Share on such date on the NASDAQ System, or any similar system then
in use, or, if no such quotations are available, the fair market value on such
date of a Share as the Committee shall determine.
"Non-Employee Director" - means a director who a) is not currently an
officer or employee of the Corporation; b) is not a former employee of the
Corporation who receives compensation for prior services (other than from a
tax-qualified retirement plan); c) has not been an officer of the Corporation;
d) does not receive remuneration from the Corporation in any capacity other than
as a director; and e) does not possess an interest in any other transactions or
is not engaged in a business relationship for which disclosure would be required
under Item 404(a) or (b) of Regulation S-K.
"Non-Qualified Stock Option" - means an option to purchase Shares granted
by the Committee pursuant to Section 6 hereof which is not intended to qualify
under Section 422(b) of the Code.
"Option" - means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" - means any director, advisory director, director emeritus,
officer or employee of the Corporation or any Affiliate who is selected by the
Committee to receive an Award or who is granted an Award pursuant to Section 19
hereof.
"Plan" - means the 1998 Stock Option and Incentive Plan of the
Corporation.
"Related" - means (i) in the case of a Right, a Right which is granted in
connection with, and to the extent exercisable, in whole or in part, in lieu of,
an Option or another Right and (ii) in the
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case of an Option, an Option with respect to which and to the extent a Right is
exercisable, in whole or in part, in lieu thereof has been granted.
"Right" - means a Limited Stock Appreciation Right or a Stock Appreciation
Right.
"Shares" - means the shares of common stock of the Corporation.
"Stock Appreciation Right" - means a stock appreciation right with respect
to Shares granted by the Committee pursuant to Sections 6 and 9 hereof.
"Ten Percent Beneficial Owner" - means the beneficial owner of more than
ten percent of any class of the Corporation's equity securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members, each of whom shall be a Non-Employee
Director. The members of the Committee shall be appointed by the Board of
Directors of the Corporation. Except as limited by the express provisions of the
Plan, the Committee shall have sole and complete authority and discretion to (i)
select Participants and grant Awards; (ii) determine the number of Shares to be
subject to types of Awards generally, as well as to individual Awards granted
under the Plan; (iii) determine the terms and conditions upon which Awards shall
be granted under the Plan; (iv) prescribe the form and terms of instruments
evidencing such grants; and (v) establish from time to time regulations for the
administration of the Plan, interpretation of the Plan, and determination of all
matters deemed necessary or advisable for the administration of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.
4. Participation in Committee Awards. The Committee may select from time
to time Participants in the Plan from those directors (including advisory
directors and directors emeriti), officers and employees of the Corporation or
its Affiliates who, in the opinion of the Committee, have the capacity for
contributing to the successful performance of the Corporation or its Affiliates.
5. Shares Subject to Plan. Subject to adjustment by the operation of
Section 11 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 1,930,241. The Shares with respect to which Awards may
be made under the Plan may be either authorized and unissued shares or issued
shares heretofore or hereafter reacquired and held as treasury shares. Shares
which are subject to Related Rights and Related Options shall be counted only
once in determining whether the maximum number of Shares with respect to which
Awards may be granted under the Plan has been exceeded. An Award shall not be
considered to have been made under the Plan with respect to any Option or Right
which terminates and new Awards may be granted under the Plan with respect to
the number of Shares as to which such termination has occurred.
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6. General Terms and Conditions of Options and Rights. The Committee shall
have full and complete authority and discretion, except as expressly limited by
the Plan, to grant Options and/or Rights and to provide the terms and conditions
(which need not be identical among Participants) thereof. In particular, the
Committee shall prescribe the following terms and conditions: (i) the Exercise
Price of any Option or Right, which shall not be less than the Market Value per
Share at the date of grant of such Option or Right, (ii) the number of Shares
subject to, and the expiration date of, any Option or Right, which expiration
date shall not exceed ten years from the date of grant, (iii) the manner, time
and rate (cumulative or otherwise) of exercise of such Option or Right, and (iv)
the restrictions, if any, to be placed upon such Option or Right or upon Shares
which may be issued upon exercise of such Option or Right.
Any Award made pursuant to this Plan may, in the sole discretion of the
Committee, vest in annual installments over a period of years, with the first
installment vesting on the one-year anniversary of the date of grant, except in
the event of death or disability.
Furthermore, at the time of any Award, the Participant shall enter into an
agreement with the Corporation in a form specified by the Committee, agreeing to
the terms and conditions of the Award and such other matters as the Committee,
in its sole discretion, shall determine (the "Option Agreement").
7. Exercise of Options or Rights.
(a) Except as provided herein, an Option or Right granted under
the Plan shall be exercisable during the lifetime of the
Participant to whom such Option or Right was granted only by
such Participant and, except as provided in paragraphs (c) and
(d) of this Section 7, no such Option or Right may be
exercised unless at the time such Participant exercises such
Option or Right, such Participant has maintained Continuous
Service since the date of grant of such Option or Right.
(b) To exercise an Option or Right under the Plan, the Participant
to whom such Option or Right was granted shall give written
notice to the Corporation in form satisfactory to the
Committee (and, if partial exercises have been permitted by
the Committee, by specifying the number of Shares with respect
to which such Participant elects to exercise such Option or
Right) together with full payment of the Exercise Price, if
any and to the extent required. The date of exercise shall be
the date on which such notice is received by the Corporation.
Payment, if any is required, shall be made either (i) in cash
(including check, bank draft or money order) or, if the
Committee in its discretion so determines, (ii) by delivering
(A) Shares already owned by the Participant and having a fair
market value equal to the applicable exercise price, such fair
market value to be determined in such appropriate manner as
may be provided by the Committee or as may be required in
order to comply with or to conform to requirements of any
applicable laws or regulations, or (B) a combination of cash
and such Shares.
(c) If a Participant to whom an Option or Right was granted shall
cease to maintain Continuous Service for any reason (excluding
death, disability and termination of employment by the
Corporation or any Affiliate for cause), such Participant may,
but only within the period of three
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months immediately succeeding such cessation of Continuous
Service and in no event after the expiration date of such
Option or Right, exercise such Option or Right to the extent
that such Participant was entitled to exercise such Option or
Right at the date of such cessation, provided, however, that
such right of exercise after cessation of Continuous Service
shall not be available to a Participant if the Committee
otherwise determines and so provides in the applicable
instrument or instruments evidencing the grant of such Option
or Right. If a Participant to whom an Option or Right was
granted shall cease to maintain Continuous Service by reason
of death or disability then, unless the Committee shall have
otherwise provided in the instrument evidencing the grant of
an Option or Right, all Options and Rights granted and not
fully exercisable shall become exercisable in full upon the
happening of such event and shall remain so exercisable (i) in
the event of death for the period described in paragraph (d)
of this Section 7 and (ii) in the event of disability for a
period of one year following such date. If the Continuous
Service of a Participant to whom an Option or Right was
granted by the Corporation is terminated for cause, all rights
under any Option or Right of such Participant shall expire
immediately upon the effective date of such termination.
(d) In the event of the death of a Participant while in the
Continuous Service of the Corporation or an Affiliate or
within the three-month period referred to in paragraph (c) of
this Section 7, the person to whom any Option or Right held by
the Participant at the time of his death is transferred by
will or the laws of descent and distribution, or in the case
of an Award other than an Incentive Stock Option, pursuant to
a qualified domestic relations order, as defined in the Code
or Title I of ERISA or the rules thereunder may, but only to
the extent such Participant was entitled to exercise such
Option or Right upon his death as provided in paragraph (c)
above, exercise such Option or Right at any time within a
period of one year succeeding the date of death of such
Participant, but in no event later than ten years from the
date of grant of such Option or Right. Following the death of
any Participant to whom an Option was granted under the Plan,
irrespective of whether any Related Right shall have
theretofore been granted to the Participant or whether the
person entitled to exercise such Related Right desires to do
so, the Committee may, as an alternative means of settlement
of such Option, elect to pay to the person to whom such Option
is transferred by will or by the laws of descent and
distribution, or in the case of an Option other than an
Incentive Stock Option, pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or
the rules thereunder, the amount by which the Market Value per
Share on the date of exercise of such Option shall exceed the
Exercise Price of such Option, multiplied by the number of
Shares with respect to which such Option is properly
exercised. Any such settlement of an Option shall be
considered an exercise of such Option for all purposes of the
Plan.
8. Incentive Stock Options. Incentive Stock Options may be granted only to
Participants who are Employees. Any provision of the Plan to the contrary
notwithstanding, (i) no Incentive Stock Option shall be granted more than ten
years from the date the Plan is adopted by the Board of Directors of the
Corporation and no Incentive Stock Option shall be exercisable more than ten
years from the date such Incentive Stock Option is granted, (ii) the Exercise
Price of any Incentive Stock Option shall not be less than the Market Value per
Share on the date such Incentive Stock Option is granted, (iii) any Incentive
Stock Option shall not be transferable by the Participant to whom such Incentive
Stock Option is granted other than by will or the laws of descent and
distribution, and shall
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be exercisable during such Participant's lifetime only by such Participant, (iv)
no Incentive Stock Option shall be granted to any individual who, at the time
such Incentive Stock Option is granted, owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Corporation or any Affiliate unless the Exercise Price of such Incentive Stock
Option is at least 110 percent of the Market Value per Share at the date of
grant and such Incentive Stock Option is not exercisable after the expiration of
five years from the date such Incentive Stock Option is granted, and (v) the
aggregate Market Value (determined as of the time any Incentive Stock Option is
granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by a Participant in any calendar year shall not
exceed $100,000.
9. Stock Appreciation Rights. A Stock Appreciation Right shall, upon its
exercise, entitle the Participant to whom such Stock Appreciation Right was
granted to receive a number of Shares or cash or combination thereof, as the
Committee in its discretion shall determine, the aggregate value of which (i.e.,
the sum of the amount of cash and/or Market Value of such Shares on date of
exercise) shall equal (as nearly as possible, it being understood that the
Corporation shall not issue any fractional shares) the amount by which the
Market Value per Share on the date of such exercise shall exceed the Exercise
Price of such Stock Appreciation Right, multiplied by the number of Shares with
respect of which such Stock Appreciation Right shall have been exercised. A
Stock Appreciation Right may be Related to an Option or may be granted
independently of any Option as the Committee shall from time to time in each
case determine. At the time of grant of an Option the Committee shall determine
whether and to what extent a Related Stock Appreciation Right shall be granted
with respect thereto, provided, however, and notwithstanding any other provision
of the Plan, that if the Related Option is an Incentive Stock Option, the
Related Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Stock Appreciation Right were
an Incentive Stock Option and as if other rights which are Related to Incentive
Stock Options were Incentive Stock Options. In the case of a Related Option,
such Related Option shall cease to be exercisable to the extent of the Shares
with respect to which the Related Stock Appreciation Right was exercised. Upon
the exercise or termination of a Related Option, any Related Stock Appreciation
Right shall terminate to the extent of the Shares with respect to which the
Related Option was exercised or terminated.
10. Limited Stock Appreciation Rights. At the time of grant of an Option
or Stock Appreciation Right to any Participant, the Committee shall have full
and complete authority and discretion to also grant to such Participant a
Limited Stock Appreciation Right which is Related to such Option or Stock
Appreciation Right, provided, however and notwithstanding any other provision of
the Plan, that if the Related Option is an Incentive Stock Option, the Related
Limited Stock Appreciation Right shall satisfy all the restrictions and
limitations of Section 8 hereof as if such Related Limited Stock Appreciation
Right were an Incentive Stock Option and as if all other Rights which are
Related to Incentive Stock Options were Incentive Stock Options. Subject to
vesting requirements contained in 12 C.F.R. ss. 563b.3(g)(4) or any successor
regulation, a Limited Stock Appreciation Right shall be exercisable only during
the period beginning on the first day following the date of expiration of any
"offer" (as such term is hereinafter defined) and ending on the forty-fifth day
following such date.
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A Limited Stock Appreciation Right shall, upon its exercise, entitle the
Participant to whom such Limited Stock Appreciation Right was granted to receive
an amount of cash equal to the amount by which the "Offer Price per Share" (as
such term is hereinafter defined) or the Market Value on the date of such
exercise, as shall have been provided by the Committee in its discretion at the
time of grant, shall exceed the Exercise Price of such Limited Stock
Appreciation Right, multiplied by the number of Shares with respect to which
such Limited Stock Appreciation Right shall have been exercised. Upon the
exercise of a Limited Stock Appreciation Right, any Related Option and/or
Related Stock Appreciation Right shall cease to be exercisable to the extent of
the Shares with respect to which such Limited Stock Appreciation Right was
exercised. Upon the exercise or termination of a Related Option or Related Stock
Appreciation Right, any Related Limited Stock Appreciation Right shall terminate
to the extent of the Shares with respect to which such Related Option or Related
Stock Appreciation Right was exercised or terminated.
For the purposes of this Section 10, the term "Offer" shall mean any
tender offer or exchange offer for Shares other than one made by the
Corporation, provided that the corporation, person or other entity making the
offer acquires pursuant to such offer either (i) 25% of the Shares outstanding
immediately prior to the commencement of such offer or (ii) a number of Shares
which, together with all other Shares acquired in any tender offer or exchange
offer (other than one made by the Corporation) which expired within sixty days
of the expiration date of the offer in question, equals 25% of the Shares
outstanding immediately prior to the commencement of the offer in question. The
term "Offer Price per Share" as used in this Section 10 shall mean the highest
price per Share paid in any Offer which Offer is in effect any time during the
period beginning on the sixtieth day prior to the date on which a Limited Stock
Appreciation Right is exercised and ending on the date on which such Limited
Stock Appreciation Right is exercised. Any securities or property which are part
or all of the consideration paid for Shares in the Offer shall be valued in
determining the Offer Price per Share at the higher of (A) the valuation placed
on such securities or property by the corporation, person or other entity making
such Offer or (B) the valuation placed on such securities or property by the
Committee.
11. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of Shares as to which Awards may be granted under the Plan and the
number, class and exercise price of Shares with respect to which Awards
theretofore have been granted under the Plan shall be appropriately adjusted by
the Committee, whose determination shall be conclusive.
12. Effect of Merger. In the event of any merger, consolidation or
combination of the Corporation (other than a merger, consolidation or
combination in which the Corporation is the continuing entity and which does not
result in the outstanding Shares being converted into or exchanged for different
securities, cash or other property, or any combination thereof) pursuant to a
plan or agreement the terms of which are binding upon all stockholders of the
Corporation (except to the extent that dissenting stockholders may be entitled,
under statutory provisions or provisions contained in the certificate or
articles of incorporation, to receive the appraised or fair value of their
holdings), any Participant to whom an Option or Right has been granted at least
six months prior to
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such event shall have the right (subject to the provisions of the Plan and any
limitation or vesting period applicable to such Option or Right), thereafter and
during the term of each such Option or Right, to receive upon exercise of any
such Option or Right an amount equal to the excess of the fair market value on
the date of such exercise of the securities, cash or other property, or
combination thereof, receivable upon such merger, consolidation or combination
in respect of a Share over the Exercise Price of such Right or Option,
multiplied by the number of Shares with respect to which such Option or Right
shall have been exercised. Such amount may be payable fully in cash, fully in
one or more of the kind or kinds of property payable in such merger,
consolidation or combination, or partly in cash and partly in one or more of
such kind or kinds of property, all in the discretion of the Committee.
13. Assignments and Transfers. No Award nor any right or interest of a
Participant under the Plan in any instrument evidencing any Award under the Plan
may be assigned, encumbered or transferred except, in the event of the death of
a Participant, by will or the laws of descent and distribution or in the case of
Awards other than Incentive Stock Options pursuant to a qualified domestic
relations order, as defined in the Code or Title I of ERISA or the rules
thereunder.
14. Employee Rights Under the Plan. No director, officer or employee shall
have a right to be selected as a Participant nor, having been so selected, to be
selected again as a Participant and no director, officer, employee or other
person shall have any claim or right to be granted an Award under the Plan or
under any other incentive or similar plan of the Corporation or any Affiliate.
Neither the Plan nor any action taken thereunder shall be construed as giving
any employee any right to be retained in the employ of the Corporation or any
Affiliate.
15. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933 or any other Federal, state or local
securities legislation or regulation. It may be provided that any representation
requirement shall become inoperative upon a registration of the Shares or other
action eliminating the necessity of such representation under such Securities
Act or other securities legislation. The Corporation shall not be required to
deliver any Shares under the Plan prior to (i) the admission of such shares to
listing on any stock exchange or other system on which Shares may then be
listed, and (ii) the completion of such registration or other qualification of
such Shares under any state or Federal law, rule or regulation, as the Committee
shall determine to be necessary or advisable.
16. Withholding Tax. The Corporation shall have the right to deduct from
all amounts paid in cash with respect to the exercise of a Right under the Plan
any taxes required by law to be withheld with respect to such cash payments.
Where a Participant or other person is entitled to receive Shares pursuant to
the exercise of an Option or Right pursuant to the Plan, the Corporation shall
have the right to require the Participant or such other person to pay the
Corporation the amount of any taxes which the Corporation is required to
withhold with respect to such Shares, and may, in its sole discretion, withhold
sufficient Shares to cover the amount of taxes which the Corporation is required
to withhold.
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17. Amendment or Termination. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time, but
(except as provided in Section 11 hereof) no amendment shall be made without
approval of the stockholders of the Corporation which shall (i) increase the
aggregate number of Shares with respect to which Awards may be made under the
Plan, (ii) materially increase the benefits accruing to Participants, (iii)
materially change the requirements as to eligibility for participation in the
Plan or (iv) change the class of persons eligible to participate in the Plan;
provided, however, that no such amendment, suspension or termination shall
impair the rights of any Participant, without his consent, in any Award
theretofore made pursuant to the Plan.
18. Effective Date and Term of Plan. The Plan shall become effective upon
its ratification by stockholders of the Corporation. It shall continue in effect
for a term of ten years unless sooner terminated under Section 17 hereof.
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APPENDIX H
HUDSON RIVER BANCORP, INC.
1998 AMENDED RECOGNITION AND RETENTION PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, executive officers and employees of the
Corporation and its Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Award" - means the grant of Restricted Stock pursuant to the terms of
Section 12 of the Plan or by the Committee, as provided in the Plan.
"Affiliate" - means any "parent corporation" or "subsidiary
corporation" of the Corporation, as such terms are defined in Section 424(e) and
(f), respectively, of the Code.
"Bank" - means Hudson River Bank & Trust Company and its successors.
"Beneficiary" - means the person or persons designated by a Participant
to receive any benefits payable under the Plan in the event of such
Participant's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Participant's surviving spouse, if
any, or if none, his estate.
"Code" - means the Internal Revenue Code of 1986, as amended.
"Committee" - means the Committee of the Board of Directors of the
Corporation referred to in Section 6 hereof.
"Continuous Service" - means the absence of any interruption or
termination of service as a director, director emeritus, advisory director,
executive officer or employee of the Corporation or any Affiliate. Service shall
not be considered interrupted in the case of sick leave, military leave or any
other leave of absence approved by the Corporation or any Affiliate or in the
case of transfers between payroll locations of the Corporation or its Affiliates
or between the Corporation, its Affiliates or its successor. With respect to any
director emeritus or advisory director, continuous service shall mean
availability to perform such functions as may be required of such individuals.
"Conversion" - means the conversion of the Bank from the mutual to the
stock form of organization.
"Corporation" - means Hudson River Bancorp, Inc., a Delaware
corporation.
"Disability" - means any physical or mental impairment which qualifies
an employee, director, director emeritus or advisor director for disability
benefits under any applicable long-term disability plan maintained by the Bank
or an Affiliate, or, if no such plan applies to such individual, which renders
such employee or director, in the judgment of the Committee, unable to perform
his customary duties and responsibilities.
<PAGE>
"ERISA" - means the Employee Retirement Income Security Act of 1974, as
amended.
"Non-Employee Director" - means a director who a) is not currently an
officer or employee of the Corporation; b) is not a former employee of the
Corporation who receives compensation for prior services (other than from a
tax-qualified retirement plan); c) has not been an officer of the Corporation;
d) does not receive remuneration from the Corporation in any capacity other than
as a director; and e) does not possess an interest in any other transactions or
is not engaged in a business relationship for which disclosure would be required
under Item 404(a) or (b) of Regulation S-K.
"Participant" - means any director, director emeritus, advisory
director, executive officer or employee of the Corporation or any Affiliate who
is selected by the Committee to receive an Award or a director who is granted an
award pursuant to Section 12.
"Plan" - means the 1998 Recognition and Retention Plan of the
Corporation.
"Restricted Period" - means the period of time selected by the
Committee for the purpose of determining when restrictions are in effect under
Section 3 hereof with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" - means Shares which have been contingently awarded
to a Participant by the Committee subject to the restrictions referred to in
Section 3 hereof, so long as such restrictions are in effect.
"Shares" - means the common stock of the Corporation.
3. Terms and Conditions of Restricted Stock. The Committee shall have
full and complete authority, subject to the limitations of the Plan, to grant
Awards and, in addition to the terms and conditions contained in paragraphs (a)
through (f) of this Section 3, to provide such other terms and conditions (which
need not be identical among Participants) in respect of such Awards, and the
vesting thereof, as the Committee shall determine.
(a) At the time of an award of Restricted Stock, the Committee shall
establish for each Participant a Restricted Period, during which or at
the expiration of which, as the Committee shall determine and provide
in the agreement referred to in paragraph (d) of this Section 3, the
Shares awarded as Restricted Stock shall vest, and subject to any such
other terms and conditions as the Committee shall provide, shares of
Restricted Stock may not be sold, assigned, transferred, pledged, voted
or otherwise encumbered by the Participant, except as hereinafter
provided, during the Restricted Period. Except for such restrictions,
and subject to paragraphs (c) and (e) of this Section 3 and Section 4
hereof, the Participant as owner of such shares shall have all the
rights of a stockholder.
The Committee shall have the authority, in its discretion, to
accelerate the time at which any or all of the restrictions shall lapse
with respect to an Award, or to remove any or all of such restrictions,
whenever it may determine that such action is appropriate by reason of
changes in applicable tax or other laws or other changes in
circumstances occurring after the commencement of such Restricted
Period.
<PAGE>
(b) Except as provided in Section 5 hereof, if a Participant ceases to
maintain Continuous Service for any reason (other than death or
disability), unless the Committee shall otherwise determine, all Shares
of Restricted Stock theretofore awarded to such Participant and which
at the time of such termination of Continuous Service are subject to
the restrictions imposed by paragraph (a) of this Section 3 shall upon
such termination of Continuous Service be forfeited and returned to the
Corporation. If a Participant ceases to maintain Continuous Service by
reason of death or disability, Restricted Stock then still subject to
restrictions imposed by paragraph (a) of this Section 3 will be free of
those restrictions.
(c) Each certificate in respect of Shares of Restricted Stock awarded under
the Plan shall be registered in the name of the Participant and
deposited by the Participant, together with a stock power endorsed in
blank, with the Corporation, and shall bear the following (or a
similar) legend:
The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and conditions
(including forfeiture) contained in the 1998 Recognition and Retention
Plan of Hudson River Bancorp, Inc. Copies of such Plan are on file in
the offices of the Secretary of Hudson River Bancorp, Inc., 1 Hudson
City Center, Hudson, New York 12534.
(d) At the time of any Award, the Participant shall enter into an Agreement
with the Corporation in a form specified by the Committee, agreeing to
the terms and conditions of the Award and such other matters as the
Committee, in its sole discretion, shall determine (the "Restricted
Stock Agreement").
(e) The payment to the Participant of dividends or other distributions
declared or paid on such shares by the Corporation shall be deferred
until the lapsing of the restrictions imposed under paragraph (a) of
this Section 3, and such dividends or other distributions shall be held
by the Corporation for the account of the Participant until such time.
There shall be credited at the end of each year (or portion thereof)
interest on the amount of the deferred dividends or other distributions
at a rate per annum as the Committee, in its discretion, may determine.
Payment of deferred dividends or other distributions, together with
interest accrued thereon, shall be made upon the earlier to occur of
the lapsing of the restrictions imposed under paragraph (a) of this
Section 3 or upon death or disability of the Participant. Shares of
Restricted Stock subject to restriction on the date of any shareholder
vote shall be voted by an independent party to be named by the
Committee.
(f) At the lapsing of the restrictions imposed by paragraph (a) of this
Section 3, the Corporation shall deliver to the Participant (or where
the relevant provision of paragraph (b) of this Section 3 applies in
the case of a deceased Participant, to his legal representative,
beneficiary or heir) the certificate(s) and stock power deposited with
it pursuant to paragraph (c) of this Section 3 and the Shares
represented by such certificate(s) shall be free of the restrictions
referred to in paragraph (a) of this Section 3.
4. Adjustments Upon Changes in Capitalization. In the event of any
change in the outstanding Shares subsequent to the effective date of the Plan by
reason of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum
<PAGE>
aggregate number and class of shares as to which Awards may be granted under the
Plan and the number and class of shares with respect to which Awards theretofore
have been granted under the Plan shall be appropriately adjusted by the
Committee, whose determination shall be conclusive. Any shares of stock or other
securities received as a result of any of the foregoing by a Participant with
respect to Restricted Stock shall be subject to the same restrictions and the
certificate(s) or other instruments representing or evidencing such shares or
securities shall be legended and deposited with the Corporation in the manner
provided in Section 3 hereof.
5. Assignments and Transfers. During the Restricted Period, no Award
nor any right or interest of a Participant under the Plan in any instrument
evidencing any Award under the Plan may be assigned, encumbered or transferred
except (i) in the event of the death of a Participant, by will or the laws of
descent and distribution, or (ii) pursuant to a qualified domestic relations
order as defined in the Code or Title I of ERISA or the rules thereunder.
6. Administration. The Plan shall be administered by a Committee
consisting of two or more members, each of whom shall be a Non-Employee
Director. The members of the Committee shall be appointed by the Board of
Directors of the Corporation. Except as limited by the express provisions of the
Plan, the Committee shall have sole and complete authority and discretion to (i)
select Participants and grant Awards; (ii) determine the number of Shares to be
subject to types of Awards generally, as well as individual Awards granted under
the Plan; (iii) determine the terms and conditions upon which Awards shall be
granted under the Plan; (iv) prescribe the form and terms of instruments
evidencing such grants; and (v) establish from time to time regulations for the
administration of the Plan, interpretation of the Plan, and determination of all
matters deemed necessary or advisable for the administration of the Plan. The
Committee may maintain, and update from time to time as appropriate, a list
designating selected directors as Non-Employee Directors. The purpose of such
list shall be to evidence the status of such individuals as Non-Employee
Directors, and the Board of Directors may appoint to the Committee any
individual actually qualifying as a Non-Employee Director regardless of whether
identified as such on said list.
A majority of the Committee shall constitute a quorum, and the acts of
a majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by a ma jority of the Committee without a meeting,
shall be acts of the Committee.
7. Shares Subject to Plan. Subject to adjustment by the operation of
Section 4 hereof, the maximum number of Shares with respect to which Awards may
be made under the Plan is 918,324. The Shares with respect to which Awards may
be made under the Plan may be either authorized and unissued Shares or issued
Shares heretofore or hereafter reacquired and held as treasury Shares. An Award
shall not be considered to have been made under the Plan with respect to
Restricted Stock which is forfeited and new Awards may be granted under the Plan
with respect to the number of Shares as to which such forfeiture has occurred.
The Corporation's obligation to deliver Shares with respect to an Award
shall, if the Committee so requests, be conditioned upon the receipt of a
representation as to the investment intention of the Participant to whom such
Shares are to be delivered, in such form as the Committee shall determine to be
necessary or advisable to comply with the provisions of the Securities Act of
1933 or any other Federal, state or local securities legislation or regulation.
It may be provided that any representation requirement shall become inoperative
upon a registration of the Shares or other action eliminating the necessity of
such representation under such Securities Act or other securities legislation.
The
<PAGE>
Corporation shall not be required to deliver any Shares under the Plan prior to
(i) the admission of such shares to listing on any stock exchange on which
Shares may then be listed, and (ii) the completion of such registration or other
qualification of such Shares under any state or Federal law, rule or regulation,
as the Committee shall determine to be necessary or advisable.
8. Employee Rights Under the Plan. No director, director emeritus,
advisory director, officer or employee shall have a right to be selected as a
Participant nor, having been so selected, to be selected again as a Participant
and no director, officer, employee or other person shall have any claim or right
to be granted an Award under the Plan or under any other incentive or similar
plan of the Corporation or any Affiliate. Neither the Plan nor any action taken
thereunder shall be construed as giving any officer or employee any right to be
retained in the employ of the Corporation, the Bank or any Affiliate.
9. Withholding Tax. Upon the termination of the Restricted Period with
respect to any shares of Restricted Stock (or at such earlier time, if any, that
an election is made by the Participant under Section 83(b) of the Code, or any
successor provision thereto, to include the value of such shares in taxable
income), the Corporation may, in its sole discretion, withhold from any payment
or distribution made under this Plan sufficient Shares or withhold sufficient
cash to cover any applicable withholding and employment taxes. The Corporation
shall have the right to deduct from all dividends paid with respect to shares of
Restricted Stock the amount of any taxes which the Corporation is required to
withhold with respect to such dividend payments. No discretion or choice shall
be conferred upon any Participant with respect to the form, timing or method of
any such tax withholding.
10. Amendment or Termination. The Board of Directors of the Corporation
may amend, suspend or terminate the Plan or any portion thereof at any time, but
(except as provided in Section 4 hereof) no amendment shall be made without
approval of the stockholders of the Corporation which shall (i) increase the
aggregate number of Shares with respect to which Awards may be made under the
Plan, (ii) materially increase the benefits accruing to Participants, (iii)
materially change the requirements as to eligibility for participation in the
Plan or (iv) change the class of persons eligible
<PAGE>
to participate in the Plan; provided, however, that no such amendment,
suspension or termination shall impair the rights of any Participant, without
his consent, in any Award theretofore made pursuant to the Plan.
11. Term of Plan. The Plan shall become effective upon its ratification
by the stockholders of the Corporation. It shall continue in effect for a term
of ten years unless sooner terminated under Section 11 hereof.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. Indemnification of Directors and Officers.
Article ELEVENTH of the Holding Company's Certificate of Incorporation
provides for indemnification of directors and officers of the Holding Company
against any and all liabilities, judgments, fines and reasonable settlements,
costs, expenses and attorneys' fees incurred in any actual, threatened or
potential proceeding, except to the extent that such indemnification is limited
by Delaware law and such law cannot be varied by contract or bylaw. Article
ELEVENTH also provides for the authority to purchase insurance with respect
thereto.
Section 145 of the General Corporation Law of the State of Delaware
authorizes a corporation's Board of Directors to grant indemnity under certain
circumstances to directors and officers, when made, or threatened to be made,
parties to certain proceedings by reason of such status with the corporation,
against judgments, fines, settlements and expenses, including attorneys' fees.
In addition, under certain circumstances such persons may be indemnified against
expenses actually and reasonably incurred in defense of a proceeding by or on
behalf of the corporation. Similarly, the corporation, under certain
circumstances, is authorized to indemnify directors and officers of other
corporations or enterprises who are serving as such at the request of the
corporation, when such persons are made, or threatened to be made, parties to
certain proceedings by reason of such status, against judgments, fines,
settlements and expenses, including attorneys' fees; and under certain
circumstances, such persons may be indemnified against expenses actually and
reasonably incurred in connection with the defense or settloement of a
proceeding by or in the right of such other corporation or enterprise.
Indemnification is permitted where such person (i) was acting in good faith;
(ii) was acting in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation or other corporation or enterprise, as
appropriate; (iii) with respect to a criminal proceeding, has no reasonable
cause to believe his conduct was unlawful; and (iv) was not adjudged to be
liable to the corporation or other corporation or enterprise (unless the court
where the proceeding was brought determines that such person is fairly and
reasonably entitled to indemnity).
Unless ordered by a court, indemnification may be made only following a
determination that such indemnification is permissible because the person being
indemnified has met the requisite standard of conduct. Such determination may be
made (i) by the Board of directors of the Holding Company by a majority vote of
a quorum consisting of directors not at the time parties to such proceeding; or
(ii) if such a quorum cannot be obtained or the quorum so directs, then by
independent legal counsel in a written opinion; or (iii) by the stockholders.
Section 145 also permits expenses incurred by directors and officers in
defending a proceeding to be paid by the corporation in advance of the final
disposition of osuch proceedings upon the receipt of an undertaking by the
director or officer to repay such amount if it is ultimately determined that he
is not entitled to be indemnified by the corporation against such expenses.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits. See Exhibit Index
(b) Financial Statement Schedules. Not applicable.
(c) Reports, Opinions or Appraisals. Not applicable.
Item 22. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
II-1
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) (ss. 230.424(b) of this
chapter) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(d) The undersigned Registrant undertakes that every prospectus (i)
that is filed pursuant to paragraph (c) immediately preceding, or (ii) that
purports to meet the requirements of section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suite or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE>
(f) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(g) The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Hudson, New
York on June 26, 2000.
HUDSON RIVER BANCORP, INC.
By: /s/ Carl A. Florio
--------------------------------
Carl A. Florio, President and
Chief Executive Officer
(Duly Authorized Representative)
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Carl A. Florio his true and lawful
attorney-in-fact and agent, with full power of substitution and re-substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming said attorney-in-fact and agent or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/ Carl A. Florio /s/ Earl Schram, Jr.
---------------------------- ----------------------------
Carl A. Florio, Director, Earl Schram, Jr., Chairman of the Board
President and Chief Executive Officer
(Principal Executive and
Operating Officer)
Date: June 26, 2000
Date: June 26, 2000
/s/ Stanley Bardwell /s/ Joseph W. Phelan
---------------------------- ----------------------------
Stanley Bardwell, M.D. , Director Joseph W. Phelan, Director
Date: June 26, 2000 Date: June 26, 2000
/s/ William E. Collins /s/ William H. Jones
---------------------------- ----------------------------
William E. Collins, Director William H. Jones, Director
Date: June 26, 2000 Date: June 26, 2000
/s/ Joseph H. Giaquinto /s/ Marcia M. Race
---------------------------- ----------------------------
Joseph H. Giaquinto, Director Marcia M. Race, Director
Date: June 26, 2000 Date: June 26, 2000
/s/ Marilyn A. Herrington /s/ Timothy E. Blow
---------------------------- ----------------------------
Marilyn A. Herrington, Director Timothy E. Blow,
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: June 26, 2000 Date: June 26, 2000
Date: June 26, 2000
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
2.1 Agreement and Plan of Merger between Hudson River Bancorp, Inc. and
Cohoes Bancorp, Inc. included as Appendix A to the accompanying Proxy
Statement/Prospectus.
3.1 Registrant's Certificate of Incorporation, filed as Exhibit 3.1 to
Registrant's Form S-1 registration statement No. 333-47605 (March 9,
1998) and incorporated herein by reference.
3.2 Registrant's Bylaws, filed as Exhibit 3(ii) Annual Report on Form 10-K
for the year ended March 31, 1999 (File No. 000-24187) and incorporated
herein by reference.
4 Registrant's form of Certificate of Common Stock, filed as Exhibit 4 to
Registrant's Form S-1 registration statement No. 333-47605 (March 9,
1998) and incorporated herein by reference.
5 Opinion and Consent of Silver, Freedman & Taff, L.L.P.
8.1 Tax Opinion of Silver, Freedman & Taff, L.L.P.
8.2 Tax Opinion of Elias, Matz, Tiernan & Herrick, L.L.P.
10.1 Form of Employment Agreement between Hudson River Bank & Trust Company
and certain executive officers, filed as Exhibit 10.1 to Registrant's
Form S-1 registration statement No. 333-47605 (March 9, 1998) and
incorporated herein by reference.
10.2 Form of Employment Agreement between Hudson River Bancorp, Inc. and
certain executive officers, filed as Exhibit 10.2 to Registrant's Form
S-1 registration statement No. 333-47605 (March 9, 1998) and
incorporated herein by reference.
10.3 Form of Change-In-Control Severance Agreement with certain officers of
Hudson River Bank & Trust Company, filed as Exhibit 10.3 to
Registrant's Form S-1 registration statement No. 333-47605 (March 9,
1998) and incorporated herein by reference.
10.4 Hudson River Bank & Trust Company Employee Severance Compensation Plan
filed as Exhibit 10.4 to Registrant's Form S-1 registration statement
No. 333-47605 (March 9, 1998) and incorporated herein by reference.
10.5 Registrant's Employee Stock Ownership Plan, filed as Exhibit 10.5 to
Registrant's Form S-1 registration statement No. 333-47605 (March 9,
1998) and incorporated herein by reference.
10.6 Form of Hudson City Savings Institution 401(k) Savings Plan filed as
Exhibit 10.6 to Registrant's Pre- Effective Amendment No. 1 to
registration statement No. 333-47605 (May 1, 1998) and incorporated
herein by reference.
10.7 Benefit Restoration Plan filed as Exhibit 10.7 to Registrant's
Pre-Effective Amendment No. 1 to registration statement No. 333-47605
(May 1, 1998) and incorporated herein by reference.
10.8 1998 Stock Option and Incentive Plan filed as Exhibit A to the
Registrant's Proxy Statement filed on November 13, 1998 in connection
with the Company's Special Meeting for Shareholders and incorporated
herein by reference.
10.9 1998 Recognition and Retention Plan filed as Exhibit B to the
Registrant's Proxy Statement filed on November 13, 1998 in connection
with the Company's Special Meeting for Shareholders and incorporated
herein by reference.
<PAGE>
Exhibit
23.1 Consent of Silver, Freedman & Taff, L.L.P. (Included in Exhibits 5 and
8.1)
23.2 Consent of Elias, Matz, Tiernan & Herrick, L.L.P. (included in Exhibit
8.2)
23.3 Consent of KPMG LLP
23.4 Consent of Arthur Andersen LLP
23.5 Consent of Sandler O'Neill & Partners, L.P.
23.6 Consent of Keefe Bruyette & Woods, Inc.
99.1 Form of Proxy Card of Hudson River.
99.2 Form of Proxy Cards of Cohoes.
